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It is very refreshing to see content creators putting considerable effort to research and synthesize a lot of information in order to present something truly informative and insightful.

I loved the balance between the up and downsides for the economic growth. Wages were low, and that greatly helped the economy, but the workers were screwed

I remember when everyone was saying that China would overtake the US economy, but I’ve heard that before (Japan in the 1980s). It takes more than just growth to become a superpower. It takes political, financial and social structures to keep that fire going. Economically, China was advanced, but their financial system is still VERY old school, and their political system can’t allow enough freedom for people to make the choices needed to keep the economic advances going.

Fascinating, man. Really valuable to have this kind of foundational knowledge at the back of one's mind while navigating the deluge of opinions about world events.

Fantastic video, explaining in clear and understandable language why a country needs a thriving service sector and why the service sector must arrive at the last stage of development. The best part of the video is at 22:45, which explains the rationale for the stages of economic development.

If 5% GDP growth is considered stagnation, then my country is in a deep recession.

I really appreciate your videos, as I find you intellectually honest, always being clear about what you base your claims on and what the limits of your claims are. Too rare on KZfaq...

Very good videos. Love the academic and journalistic integrity you put into these videos. Keep up the great work!

Fantastic. I now understand why all the three sectors; Agriculture, Manufacturing and Services should emanate progressively in that order and coexist, with the latter employing the majority of the people. Domestic consumption is the key to sustainable development. It's also imperative to aim at sustainability way more than chasing infinite growth in a finite world. Lastly, to boost employees incomes, it's necessary to upgrade to manufacturing of advanced goods whose prices aren't dependent on cost of production but on the value consumers derive by consuming them! Great video as always. Kudos mkubwa.

Appreciate all the research you put into this, excellent deep dive into the topic. Thanks!

Excellent video, sums up a lot of research accessibly and concisely

India wasn't very open. It was protectionist throughout the Cold War and mostly remains so today. At the end it doesn't seem like, "don't need," but rather, can't afford. Great video, as usual.

After hearing all the details I still think the simplistic explanation that China opened up -> economic progress, China closing down -> economic stagnation. Just that in this instance closing down means they won’t allow their population to evolve into consumers as they need to.

Hi Joeri, very interesting video! On another note: what's your take on Argentina using dollar as their primary currency? Abstracting the likelihood of this happening if course, could this curb inflation or is this a huge risk considering international trade?

Great video! Thank you for uploading such an informative video

By holding itself back, China was attempting to prevent the mantle of manufacturing powerhouse from going to nations that were next in line to assume that role, like Vietnam, Bangladesh, etc. Which would in turn make them more powerful.

Incredible work Joeri. Thank you for putting this together. I learned alot and I found it very insightful.

Really well put together. Thanks for providing clarity on all this controversy on what’s happening in China

I love your videos. Have been a fan since the start of the channel. Keep making high quality informative videos !

Wow! There is so much to unpack here. It reminds me of two neighbors of ours when I was growing up. The first couple bought the house right next to ours and the wife was a lawyer, while the husband designed and built successful engines for race cars. They made an enviable amount of money and used the money to add a second story to their house, buy land from the farmer behind us, and install an in-ground swimming pool, all of which increased the value of their home and, because there were no loans or interest payments, were inexpensive for them relative to the equity value they built up. The other neighbors, not to be outdone, but not earning as much as the first neighbors, took out a second mortgage with a high-interest rate (this was in the mid-1980s) and also built a second story and installed a swimming pool with a heated jacuzzi... and spent the next 10 years struggling to pay both mortgages until finally his wife left him and he went bankrupt, selling the house at a loss. The new owners promptly filled in the swimming pool. China is the second neighbor who was, as we say in America, "Trying to keep up with the Joneses" and racking up untenable debt with no means to ever pay it back. (1) As Li Keqiang pointed out, 600 million Chinese people - or roughly 40% of the population - still had a monthly income of just 1,000 yuan ($137) when Xi was declaring China's victory over poverty and, further, Xi never 'ended' poverty, but rather just redefined the level needed to no longer be CALLED impoverished to a lower number. He further, stopped counting the rural areas of China in many of the official statistics. Lastly, also as Li Keqiang pointed out, "the CCP's GDP figures are man-made" (I am paraphrasing, of course). (2) China was never so much a 'manufacturer' as a 'fabrication hub' for foreign manufacturers except for the lowest skill levels of manufacturing. They could not 'manufacture' a ballpoint pen from start to finish until 2016 and that pen sucked: It is no longer produced. Their manufacturing consisted of foreign designs, foreign skilled labor, foreign machines, foreign machine parts, foreign high-end chips with, most importantly, foreign-supervised quality control. For those who think I am not being honest, or being too critical, then one need only to look with their own eyes the predictable collapse of logistics hubs, and cargo container ports from the very second that the CHIPS Act was passed in the US and similar "de-risking" moves that were made by other, real, manufacturing countries. (3) Compounding the problems that the Covid lockdowns (and unreported deaths) had caused, the CCP passed the HK National Security Act and Espionage Act which defined normal and even legally required business practices such as Due Diligence and Auditing to be criminalized with many foreign businesspeople being arrested for the legally-required task of collecting information to prevent liability. (4) the Ponzi Scheme of Evergrande, Country Gardens, and associated banks in the Real Estate and Development industries revealed other, related and unrelated, 'schemes' in China such as the High-Speed Rail systems (high-speed rail debt is 3X that of Evergrande), BRI, the use of excessive development twice a year as tax revenue for local governments, ChaBuDuo "Tofu Dreg" construction (which was largely unknown in the West before two years ago), the government-supported theft of depositor's bank deposits by banks, the hurdles of profit repatriation, etc. etc. etc. I could go on and on and on and back each statement up with primary sources. An unabridged listing of the grievances would be such a multi-volume set of books that the first volume would be the table of contents and the last 5 volumes would be a listing of cites and sources. I don't disagree with much of this video, especially with the Economics 101 lessons and the names of the models, but as with everything else in post-Mao China, each model as it applies to China needs to be appended with the notorious " -- With Chinese Characteristics" suffix. This video glosses over "Forced Technology Transfer" especially when it is coupled with "Intellectual Property (IP) Theft." Further, while it talks about the explosion of BYD EV cars onto the world stage, it ignores that the world has very severe "Buyers Remorse" and the market is just as quickly imploding for China car makers. The same is true for Huawei products even among Chinese buyers of Huawei phones. Temu, Shein, and Alibaba are also quickly gaining bad reputations for being shoddy and not worth the hassle: Clothing that falls apart after one wash, plastic that crumbles in the hand after one use, fire extinguishers filled with sand, EV batteries that catch fire, etc. It is nearly impossible to sue the companies.

I've been watching the KZfaq channel "China Update" for a year or more, and "Tony" (who produces that channel) often cites the work of economist Michael Pettis of Peking University. (I have no idea why the CCP allows Pettis to keep his job.) Thus much of what you said here was familiar to me. However, your presentation was clear and concise. Your video does a very good job of providing a casual viewer with the background which is required to understand China's current dilemma: CCP control vs. the development of a sustainable service economy. Thank you.

Great way of presenting different views and scenarios! I very much enjoy the analysis. Thank you!

Fascinating stuff. I really appreciate how you broke down super complex topics without numbing them down. Truly making things simple but not too simple! Just discovered your channel today and I will follow it closely. One of the best KZfaq finds in a long time. :)

GREAT VIDEO MAN!!! You have an excellent niche here. Great distillation of the Pettis thesis into a narrative many can understand. A true educator!

I love your videos ! It is refreshing to see someone research both side of every argument. Keep up the good work please :)

I am an expat living in China. It’s true that the economy has slowed down quite a lot in China, but unlike many other countries, which suffered similar economic slow down plus high inflation, inflation in China is non-existent.

Excellent synopsis. Thanks.

If China stops accepting the US PAPER dollars in exchange for their high quality products, then do you think US is still thriving? If the US regime and American people keep borrowing/printing PAPER dollar/spending, then do you think China will keep accepting those US PAPER dollars?

Thank you, your research finally make me understand what is going on with China’s economy

Your videos always look so amazing 🎉

I really enjoyed this. I had so many questions about the standard narrative because I saw inconsistencies and this was a good summary. When I finish this comment, I’m going to see what books were used for reference and read up.

Your content is great, I hope more people will watch it in the future. Thank you for educating me.

I always love your analysis. I would love it if you covered the Indian Economy in such detail sometime.

You should really look into Wenzhou Model of growth for China's future. Most people outside of China look at Shenzhen and thinks that is the model for China. Most Chinese look at wenzhou model instead.

Thanks for explaining so simply

I think you have forgotten a few issues that makes the Chinese situation different: the corruption from higher officials, where the recent economic growth goes mostly, the high central and local government’s debts, (like the Germans in the 1920’s) and the pressure to keep the wages low or even cutting wages. Also, cultural and political difference (discouraging individual thinking, instead, copying behavior is encouraged). This all will make the change in economic thinking very difficult.

The U.S. "Great Depression" covered the interwar period between WWI and WWII; a period of declining global cooperation. Japanese stagnation occurred within a period of improving globalization such that in Japan's case: "A rising tide lift[ed] all boats". The fact that both Russia and China wish for "border adjustments" at this critical juncture in Chinese economic development - bodes ill for the type of economic "adjustment" they are going to endure.

Can you talk about the economic plans for argentina from the new president elect Javir Milei? Specifically the dollarization of the economy and closing of the central bank and how viable it is?

Excellent video. Learned so much. Your channel deserves millions of subscribers.

Amazing analysis-thank you!

I really enjoyed this video, especially the linking of current events to a specific model. I would love to learn more about different development models

Great video. Regarding the political causes of China's growth, before even having good policies, a country should not have a destructive regime. I believe that a developed country is a country where the elites understand that it is more profitable to steal 2% of a billion rather than 50% of a million. I get a lot of story from people from North-Africa who learned how to run a company in the West but when they try to do it back home, they get blocked by some administrative power who expect to take away a lot of money from them. It is not even corruption, it is sabotage.

Watching this video from Shenzhen 😉 Very balanced storytelling, thank you for your analysis!

Great in depth video. Love to see more of these.

Maybe it's too unknown to reach a wide audience in video, but I'd love to hear you explain the case of Thailand and why it did not manage to follow the East Asian growth model when it had a lot of advantages going for it.

Love this guys presentation style. Very balanced and not sensationalized. His students were very fortunate.

Amazing educational video, thank you!

Excellent and clear review. Thank you

Sounds a lot similar to what I feel was happening in Russian economy in late 2000s. The people in power didn't want to let anyone in and took away businesses from anyone successful. As a result, the economy couldn't develop properly, since all the perspective businesses were taken over by less competent oligarchs and bureaucrats.

Thank you for the great content as usual! Considering as you point out that China government already recognized the problem in 2007, and considering the unwillingness to further empower households and the private sector to boost domestic consumption, I wonder if those conditions were an incentive for the CCP to shift toward a more authoritarian rule, anticipating the increasingly challenging economic and social issues ahead.

Excellent analyze. Thank you.

Great video. Well researched!

I think what most people are getting wrong here is that they think this whole stagnation thing will result in the collapse of China or at least will prevent it from be becoming a superpower. China will continue on the path of becoming a superpower capable of competing with the US on a global scale, it just won't dwarf the American economy as some used to speculate a decade ago. Just know that the Soviet Union never managed to overtake the American Economy, this however didn't prevent it from competing with the Americans for 50 years.

Thanks you for explaining the situation in China. I would argue as well that Chinese would rather have low growth economy then go to a service based economy as they see a lot of social consequences of doing so, like in the USA unappealing.

Thanks for sharing

Great video!👍

Thanks Joeri for the analysis. As an overseas Chinese I honestly don’t care if China has the world’s biggest economy… However I do want China to have a healthier economy in the long run.

The thing is many Chinese or at least their kids would leave China as soon as they can

Great analysis!

Great video, thanks

From my observations in the past 50 years, I would say that although the Chinese government tend to be slow in making necessary changes, it will do it eventually, even if at a higher cost, but they will do it.

This was insightful and amazing. Thank you for the stellar content!

Thanks!

Oh, man. This explanation is so good and simple, it's crazy. Now all makes sense!

Lifting 800 million out of poverty depends on the definition of poverty.

Thank you for such quality video, please keep it up. KZfaq audience is starving for such kind of well done material.

I never understood why economic growth is important after a certain point. Like in Japan, people's living standards are great and most people are out of poverty, why is stagnation a problem?!

Great video! Really appreciate the whole story line from the late 70s to now. So much more balanced and underpinned than the other opinions out there. Having visited China this year I must say I saw a lot of service sector dynamism driven by the strong entrepreneurial culture and tech innovation. Do you have anymore data points to show how the government is constraining the service sector?

I'd love to hear your thoughts on Taiwan's economic prospects given the geopolitical tensions with China, their looming population decline, the state of the micro-chip wars, and other relevant factors.

good analysis👍

THANKYOU FOR THR GLIZZYS SIR

As an Indian I was wondering whether artificial intelligence could in near future negate the demographic advantage India possesses and make it redundant. How would abundance created by AI and automation and much likely implementation of universal basic income as a result in rich and developed countries affect third world countries? Would cheap and young labour force be still relevant? I wonder what you think.

作为中国人，非常同意你所说的观点。产能过剩，消费不足引发的房地产泡沫和债务危机是中国经济目前最大的问题。 在中国，我们不允许说任何反对中国共产党的话，甚至看youtube都是非法的。自从习近平上台以后言论自由急剧恶化，越来越多的有钱人移民到西方国家 As a Chinese, I very much agree with what you said. The real estate bubble and debt crisis caused by overcapacity and insufficient consumption are the biggest problems in the Chinese economy. In China, we are not allowed to say anything against the Chinese Communist Party, and even watching KZfaq is illegal. Free speech has deteriorated dramatically since Xi Jinping came to power. More and more wealthy people are immigrating to Western countries

Fantastic video Joeri! Mooi werk

thank you.

Hey Joeri, some people have been saying that Britain is the sick man of Europe, and that it's regional inequality and lack of productivity have caused it to be knocked down from 'advanced' economy status to 'developing middle income' status. My question is, do you agree with this sentiment and if so, what do you think the UK needs to do to get back on track?

China did already overcome the US in terms of manufacturing and the GDP PPP... And when it comes to services, it's important to remember that services in China are an order of magnitude cheaper than in the US, so the equal or even greater growth in the services in China when compared to the US, won't show as much on the graph, because the raw GDP is just calculated on the amount of dollars spent, not on the quantity/quality of goods and services. There are TONS of growth in the Chinese service industry, both in things like software and in things like the restaurants, food delivery, whatever... It's just not as visible on the graph. I am not an expert in any way, but I don't think the Chinese policty makers really pursue as much growth in terms of raw GDP numbers anymore, because the GDP statistics of China's main competitor, the US, are very much inflated by finance speculations, so there's very little reason to compete in terms of who has more dollars with a country that can literally print as much of it as it wants. And, while the US still dominates the world financially and militarily, it's already behind in terms of quantity (and sometimes even quality) of production of almost anything, from food and concrete to cars and electronics (except the smallest chips, but even here China has a chance to catch up), and in many areas the gap is probably going to grow even more (I mean, we've probably all seen many statistics videos where China's indicators like manufacturing just go through the roof). And the isolated examples like the abandoned cars you showed in the video are just anecdotal evidence. I mean, most Chinese DO buy WAAAY more than they ever did before, and get a way better price to quality ratio than in most places in the world. By the way, while I do respect you, in most of your videos, your argument that "The Chinese citizens are just too poor to buy as much" is just plain wrong. For example, the "tons of cars" are standing without the owners in some field not because nobody could afford them (a lot of them cost less than 5000$ each, so most people in China indeed can afford those), but because they are of an older generation of EV vehicles that were owned by car sharing companies that went bankrupt, but didn't find buyers for their cars, because there are newer alternatives which are more reliable and easier to use. Also, why is having 3 billion homes when you have just 1,4 billion people bad? You need to remember that China has a Communist ideology, so they expect that due to automation, people will be able to work less and have more leisure time, so they probably expect that people would want to travel more and be able to live in different places at different points of their lives. Even if they will not abandon the concept of money altogether by that point, the excessive housing would still beneficial because it will protect the housing market from the rent increases that plague US and Canada, for example.

As much as I want China to fail, the unbiased and intelligent look into their economy has won me over. Great job, possibly one of the most enlightening videos I've watched.

great video boss

I've been looking forward to this video. This is one of the only channels that reliably provides insightful and unbiased information!

Loved this balanced and well-researched video. The only thing I am wondering about is why you didn't include a part about the demographic changes in the country that are often claimed to have had a large effect on the ecnonomy. The large growth in population from the 1960s and the decline now after decades of the One Child Policy

Excellent commentary 👌

Already knew this was going to happen to China well over 6 years ago.

Good observation. They can’t collapse due to the state controlled banks, they wont succeed in consumption led growth since it’ll be politically impossible and they’re running out of time to do so, the only possible scenario is the Japanese style lost decades. It could be wrong, maybe China can find a way out and not fall into one of the three outcomes to break through the mid income trap, but it will be really difficult.

Thank you for this video! It's really impressive! You really went the extra mile to find the truth and present a comprehensive picture of China's economy.

Very nice recap and relating to models and influencers. Something omitted was the acquisition of American debt, of which China is the largest holder, and seems to be starting to unwind. How much and how fast? The braking effect on the US economy? Counter measures and their effects…😮

I learnt the other day about the 70 year interest rate cycle. I was wondering what your thoughts on this were? USA interest rate cycle every 70 years. Are we going to see interest rates rise for the next 30 years?

Excellent format and Fantastic video and why a country needs a thriving service sector to keep growing.

China’s investment growth model was made more powerful by the simultaneous dynamic of being the most attractive developing country to outsource to, & having full access to Western R&D without contributing a penny due to its confiscatory trade policies. Policies which didn’t look threatening at the time due to China’s lower stature, but now have become too late to do anything about barring concerted gov efforts.

Thanks

Near the end when you talk about the future I was hoping that you touch briefly upon China's last 5 year plan that they released in 2021. In it, they have addressed it as their stated goals of fixing of many of the problem sectors that you touch upon in this video. For example, they mention lifting the restrictions of the hukou system in cities under 3 million people.

Just an amazing and informative video not just on China but previous similar economic growth. I do generally agree with you at the end. The debt issue and housing crisis do leave a lot of potential for Great Recession type fall though with a smaller fall. Ultimately, I see them have modest-stagnant growth in the long run. Based on demographics and where China is today, i see slow but steady drop until 2030’s then it will hit some sort of stagnant phase for a while. Maybe 2% annual growth year in year out rather than 0-1% Japan had

Excellent economic analysis.

Very good and understandable video. I almost always learn something new from your video's. Perhaps a nice topic in a similar vein would be India. I recently saw a video about India and why skipping over the Industrial phase, and business rules / coruption effecting companies over 10 employees causes huge problems. Would love to hear your view on it, and if there is any thruth in it and a good way forward.

Odd how Shenzhen in the 1980's look so similar to some parts of Vietnam today😐. Good video Joeri. Looking good today. Seems you lost some weight. Stay healthy.👍

Excellent video. I appreciate the insights. One small correction. At the beginning you implied that singapore is not authoritarian. That is very much incorrect.

Incredible video!

cultural marxism and its disastrous effects on any economy

China is growing at 5% this year and projected to grow at 4% in the coming years and already passed the US in PPP-adjusted GDP, which is the more accurate international measuring stick for economies. If that's "stagnation" to you, particularly at the level China already is, I don't know what to say. Look to the EU if you want to see actual stagnation and "falling from grace". EU can barely do 1% growth. Japan's situation you did mention, and China is in fact far from that. You still have a point though, but I think China will address it. The reason Japan did not address its similar issue and went to stagnation was because Japan is a vassal state of the US, and the US basically told Japan to do that. This is not the case with China.