C-suite executives across Chinese industry anticipate falling input prices as lower costs for raw materials and logistics drive efficiencies.
The Cheung Kong School of Business publishes proprietary surveys of hundreds of top business managers across China, and companies report chronic falls in prices for raw and intermediate goods.
But they also report difficulty in passing through these savings to bottom-line profits; consumer prices are also falling, relentlessly, economy wide.
In Western economies, deflation is a signal of collapsing economic activity, and even depressions.
But Chinese deflation is a result of powerful supply-side forces that have the opposite effect: China's economy continues to grow at solid rates, while rent-seeking profits are extinguished at the company level by high competition.
Closing scene, Shexian, Anhui
cfgaussian - 4w
But Chinese deflation is a result of powerful supply-side forces that have the opposite effect: China's economy continues to grow at solid rates, while rent-seeking profits are extinguished at the company level by high competition.
Because that is the point of socialism. To build productive forces to such a level that everyone can enjoy abundant and cheap goods. Deflation is the goal of technological and productive progress. We develop more abundant and efficient productive capabilities such that goods can be made more widely available, in larger quantities and at cheaper prices. The point is not for corporations to make profit. Profit is an inefficiency. The less profit there is the more that the real costs of production are reflected in the costs paid by the consumer. In an ideal world where production and consumption is perfectly balanced profits would be zero because the economy would not be based on the for-profit capitalist mode of production but on socialized production for the good of the people. In the longest term, in the far distant future, humanity should aspire to a real post-scarcity society in which the cost of all goods is zero and all needs are fulfilled. That would represent the ultimate deflation.
I know me saying this is going to trigger some people who keep insisting that deflation is bad and China needs to become a debt and consumption driven society like the US. But i have yet so see a single good argument for why higher consumer prices and a trade deficit would be a good thing for China in the long run, or how this is consistent with the goals of socialism.
My argument on the other hand is simple: do we live in a post-scarcity world? No? Then there is no such thing as overcapacity yet, and producing more things more efficiently is a good thing for the world (within the limits of what is environmentally sustainable of course).
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TankieReplyBot - 4w
I found a YouTube link in your post. Here are links to the same video on alternative frontends that protect your privacy:
rainpizza in economics
Top China execs forecast more deflation and falling profits ahead. And that's the plan.
https://www.youtube.com/watch?v=wQex7kNSnJgC-suite executives across Chinese industry anticipate falling input prices as lower costs for raw materials and logistics drive efficiencies.
The Cheung Kong School of Business publishes proprietary surveys of hundreds of top business managers across China, and companies report chronic falls in prices for raw and intermediate goods.
But they also report difficulty in passing through these savings to bottom-line profits; consumer prices are also falling, relentlessly, economy wide.
In Western economies, deflation is a signal of collapsing economic activity, and even depressions.
But Chinese deflation is a result of powerful supply-side forces that have the opposite effect: China's economy continues to grow at solid rates, while rent-seeking profits are extinguished at the company level by high competition.
Closing scene, Shexian, Anhui
Because that is the point of socialism. To build productive forces to such a level that everyone can enjoy abundant and cheap goods. Deflation is the goal of technological and productive progress. We develop more abundant and efficient productive capabilities such that goods can be made more widely available, in larger quantities and at cheaper prices. The point is not for corporations to make profit. Profit is an inefficiency. The less profit there is the more that the real costs of production are reflected in the costs paid by the consumer. In an ideal world where production and consumption is perfectly balanced profits would be zero because the economy would not be based on the for-profit capitalist mode of production but on socialized production for the good of the people. In the longest term, in the far distant future, humanity should aspire to a real post-scarcity society in which the cost of all goods is zero and all needs are fulfilled. That would represent the ultimate deflation.
I know me saying this is going to trigger some people who keep insisting that deflation is bad and China needs to become a debt and consumption driven society like the US. But i have yet so see a single good argument for why higher consumer prices and a trade deficit would be a good thing for China in the long run, or how this is consistent with the goals of socialism.
My argument on the other hand is simple: do we live in a post-scarcity world? No? Then there is no such thing as overcapacity yet, and producing more things more efficiently is a good thing for the world (within the limits of what is environmentally sustainable of course).
I found a YouTube link in your post. Here are links to the same video on alternative frontends that protect your privacy: