China exports like a trillion dollars of value more than it imports, and it seems to actively maintain this stance - Does it? And if so, why? My reductive ape-brain says if more goods are leaving your country than coming in, then other countries are accumulating actual goods, and your country is accumulating pieces of paper (or digital bits). Seems like a losing strategy.

Why not just make all the goods that your country wants (especially if you're an enormous country that can scale economies and has access to strategic materials like China) and then you'd have more stuff?

And how do currency exchange markets fit in? I thought exporting and importing and fluctuating value of currencies meant that it should all sort of 'balance out' in the end. Because prices of currencies change the value of export/import and consequently you'd eventually have a country that exports and imports the same value of goods.

Maybe I fundamentally misunderstand the purpose of trade. Or maybe I've been playing too much Victoria 3.

  • notceps [he/him]
    ·
    1 year ago

    China didn't have capital, specifically Deng invited foreign capital to increase the rate of industrialization and they are still in that process, like the amount of poor people in China has improved a ton but there's still people living in rural china without access to warm water or electricity.

    In addition, being the manufacturing base of the world means it's much harder to take action against china, western countries do like their treats and third world countries rich in resources will over time align with china because they have close relationship.

    Don't know if china still pursues that strategy but they had a somewhat fixed exchange rate between the Renminbi and USD, basically exchange rate can be in an 'acceptable band'.

    • Avengermate [none/use name]
      ·
      1 year ago

      This gives China a decisive advantage because it underprices their goods. Nobody can beat their prices. The "real" rate of USD to CNY should be around 4, but they keep it pumped up to around 7.

      As an American it's just weird seeing a government take actions that benefit itself.

      • notceps [he/him]
        ·
        1 year ago

        Eh, I wouldn't sign that, under pricing your goods is obviously going to help in maintaining the trade imbalance but it also comes with serious negatives, the biggest one is that they have almost no control over their own currency policy and the other one is that they need to have massive amounts of reserves, like there's a reason why a country like china that knows that is in conflict with the USA still is the biggest owner of US debt that is at risk of just getting eliminated.

      • hexaflexagonbear [he/him]
        ·
        1 year ago

        What? Lol. You have to be insane to make the claim that America doesn't take actions to benefit itself.

        • SaniFlush [any, any]
          ·
          1 year ago

          I think Aven meant “take actions which benefit citizens besides the ruling class”

    • StalinForTime [comrade/them]
      ·
      1 year ago

      Just on the first point, it depends on what you mean by capital. It looks like two senses are being confounded in your comment.

      If you mean it in the sense of Neoclassical/mainstream economics, i.e. artificial goods used to create further goods (i.e. machinery and equipment), i.e. as a means of production, which seems to be what you mean, then China did have this before Deng. Every society does. China had greatly economically developed its means of production during the Maoist period, and industrialization had already progressed to a significant degree. See what Amartya Sen, of all people, said about the Maoist period:

      • Because of its radical commitment to the elimination of poverty and to improving living conditions - a commitment in which Maoist as well as Marxist ideas and ideals played an important part - China did achieve many things… [including] The elimination of widespread hunger, illiteracy, and ill health… [a] remarkable reduction in chronic undernourishment… a dramatic reduction of infant and child mortality and a remarkable expansion of longevity.

      • The accomplishments relating to education, health care, land reforms, and social change in the pre-reform [i.e. Maoist] period made significantly positive contributions to the achievements of the post-reform period. This is so in terms of their role not only in sustained high life expectancy and related achievements, but also in providing firm support for economic expansion based on market reforms.

      According to the Journal of Global Health

      • Life expectancy soared by around 30 years, infant mortality plummeted and smallpox, sexually transmitted diseases and many other infections were either eliminated or decreased massively in incidence... By the mid-1970s, China was already undergoing the epidemiologic transition, years ahead of other nations of similar economic status. This was due to population mobilization, mass campaigns and a focus on sanitation, hygiene, clean water and clean delivery," as well as "clinical care and continuing public health programs to the masses through community-funded medical schemes and the establishment of community-based health workers "

      According to Population Studies

      • China's growth in life expectancy at birth from 35–40 years in 1949 to 65.5 years in 1980 is among the most rapid sustained increases in documented global history... Physician and hospital supply grew dramatically under Mao due to a variety of factors (including increases in government financing, the introduction of social insurance for urban public employees, and the launch of China's Rural Cooperative Medical System in the mid-1950's). Rural Cooperative Medical Schemes (CMS) were vigorously promoted and became widespread in the late 1960's as part of the Cultural Revolution.

      Sen also emphasizes gains in education:

      • China's breakthrough in the field of elementary education had already taken place before the process of economic reform was initiated at the end of the seventies. Census data indicate, for instance, that literacy rates in 1982 for the 15-19 age group were already as high as 96 percent for males and 85 percent for females.

      Finally, see Maurice Meisner (Mao's China and After) to summarize:

      • *Yes despite all the failings and setbacks, it is an inescapable historical conclusion that the Maoist era was the time of China's modern industrial revolution. Starting with an industrial base smaller than that of Belgium's in the early 1950's... [China] emerged at the end of the Mao period as one of the six largest industrial producers in the world.*

      • The Maoist economic record... compares favorably with comparable stages in the industrialization of Germany, Japan, and Russia - hitherto the most economically successful cases (among major countries) of late industrialization. In Germany the rate of economic growth for the period 1880-1914 was 33 percent per decade. In Japan from 1874-1929 the rate of increase per decade was 43 percent. The Soviet Union over the period 1928-1958 achieved a decadal increase of 54 percent. In China over the years 1952-1972 the decadal rate was 64 percent. This was hardly economic development at "a snail's pace," as foreign journalists persist in misinforming their readers.

      If you mean capital in the Marxist sense as a social relation of self-producing value underwritten by a class relationship, then it can be argued that this was largely eliminated from China between 1956-1978, before being reintroduced under Deng.