Carl Zha, host of the Silk and Steel podcast, joins Razib to discuss topics such as living as a Han Chinese in Indonesia, the genetic diversity of the Han ethnicity, China's economic challenges and future predictions, the impact of AI on the global economy, Chairman G's one-man rule in China, and advancements in Chinese science challenging American dominance.
China's economy is shifting from labor-intensive industries to more automated processes, with the potential for future growth in the semiconductor industry.
Short-term fluctuations should not overcorrect perceptions of China's economy, as foreign direct investment remains strong and indicates confidence in future growth.
China's population challenges and real estate obsession are not unique, highlighting the need to explore alternative investment opportunities and address the issue of overcrowded cities.
Deep dives
China's economic transition: Slowing growth, but room for future development
China's economy is experiencing a slowdown and undergoing a transition. The real estate bubble has collapsed, and there are challenges with the working-age population declining. However, it is important to note that China's urbanization rate is only around 63%, leaving room for further growth. The economy is shifting from labor-intensive industries to more automated processes, and there is a need for skilled labor to drive productivity. While there may be temporary pain, the adoption of automation and the development of the semiconductor industry could provide a boost to the Chinese economy in the future.
Over on media hype and short-term signals
There has been an overreaction to short-term signals regarding the Chinese economy. During the early phases of the COVID-19 pandemic, China seemed to have its economy together, and earlier reports were bullish on China's economic prospects. It is important to be cautious about overcorrecting based on short-term fluctuations. Foreign direct investment in China remains strong, indicating that the smart money is still betting on future growth.
China's scale and potential for growth
Comparisons between China and Japan must be considered with caution due to the difference in scale. China's population is over an order of magnitude larger than Japan's, and the potential for growth is still significant. While the Chinese economy may be facing cyclical pain and undergoing a transition, there is still room for growth in areas such as urbanization and productivity improvement. Comparisons to Japan's economic situation in the 1990s may not be directly applicable.
China's obsession with real estate and need for diversification
China shares a global obsession with real estate, which may need to be addressed. The focus on real estate as a high-return investment option has led to issues such as the collapse of the real estate bubble. However, this issue is not limited to China and is a global problem. China needs to diversify its investment options and provide other avenues for people to invest their savings. The bursting of the real estate bubble can potentially be a wake-up call to explore alternative investment opportunities.
China's Population and Fertility Challenges
China's population challenges are not unique to the country and are mostly a problem faced by the developed world. The cost of childrearing, such as education and housing, has made people more hesitant to have children. The overcrowded cities in China and East Asia, such as Tokyo, Seoul, and Shanghai, are further evidence of the need to address the population issue. While China could adopt policies like providing more maternity leave and pay, the global decline in fertility rates suggests that this is an issue affecting many countries.
China's Role in the World Economy
China's relationship with the global economy is undergoing a shift. China is intensifying its engagement with the global South, such as Africa and Southeast Asia, while facing restrictions from the Western block, primarily led by the United States. The high-tech sector is a particular area of contention, with the US imposing sanctions on Chinese AI and semiconductor industries. However, China continues to engage with other countries and welcomes outside investment. While there is a bifurcation between the Western and Eastern blocks, China is still participating in the global economy, though it may focus more on its internal consumer market in the future.
On this episode of Unsupervised Learning Razib talks to Carl Zha. Zha is a Sichuan-born China-commentator who had a long-term professional sojourn in southern California, before settling in Bali, Indonesia. He hosts the Silk and Steel podcast, which covers China, the Silk Road, and more general history, culture and geopolitics. Zha and Razib have known each other since the 2010’s, and often circle back to discussions of China, its history, politics and culture. The course of their conversations has spanned both the close of the “Chimerica” period of trade and political relations, and the more adversarial status that obtains in both the US and in the People’s Republic of China under Xi Jinping.
But first, Razib and Zha discuss what it’s like to live as an ethnic Han Chinese in Indonesia, albeit one who resides in Hindu-majority Bali, where Zha settled after marrying a local woman and becoming a father. Though Indonesia has an economically and politically powerful Chinese minority, it was also the scene of ethnic riots in the 1990’s and a genocide of Han Chinese in the 1960’s. Until recently, the state did not recognize Confucianism as a religion and discouraged Chinese names and Chinese-language schools. Nevertheless, Zha presents a relatively positive picture of relations on the island of Bali, where the Hindu population seems to have had an easier time integrating Han in a more syncretistic culture than in the Muslim-majority islands.
Then they discuss the pivot in US-China relations in the last half a decade, and the possibilities presented by great power rivalry. Razib and Zha address the thorny reality that though China and the US are now embarking on more explicitly adversarial geopolitics, their economic ties remain strong, with Chinese supply chains essential for American firms like Apple and the US consumer demand essential to propping up China’s vast export sector. Zha also offers a defense of Xi Jinping's rule and the prospects for China as it turns inward from the world, focusing on its domestic market and shoring up its geopolitical positions. The discussion turns to the range of likely outcomes in a world where the 21st century is both the American and Chinese century, and the two great powers remain both economically and geopolitically entangled through trade and numerous bilateral relationships with other nations.
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