zlacker

>>campus+(OP)
China's manufactures finding the winners. This is the system working as intended - create many producers in xyz sector via subsidies, hardcore (involution) competition from 1000s in different provinces innovate manufacturing to bare margins, losers go out of business/ get bought up by better competitors and consolidate like _intended_ outcome of other PRC industrial policy. TLDR Set up competitive environment to force producers speed run to a $250 model-T while everyone else could only make cars for $1000. Have so much competition to force manufactures to improve processes/drive down prices/affordability in short time and then settle with a few large but sustainable survivors that are globally competitive / can (out)compete with western incumbents.

>>maxglu+7c
> China's manufactures finding the winners

But what happens to the failures, especially since they are overwhelmingly subsidized by local governments?

Shanghai (SAIC), Jiangxi (BAIC), Guangxi (GAG), Guangdong (GAC), Hebei (Dongfeng), Beijing (BAIC), and other prefectures are putting tens of millions of dollars in SoEs that cannot compete with BYD domestically, and face preemptive hurdles entering foreign markets.

If these were private players, it wouldn't matter as much because they could be safely shut down, but these are mixed public-private, and this means a lot of misallocated capital due to political considerations.

Ideally, all these prefectures could better utilize that equivalent amount of money building domestic consumption instead - like I pointed to you before, the median household income in China is still around $350-400/mo in 2024, so even with a loan, a cheap class-A vehicle like a Wuling Hongguang Mini is still pricy.

Instead, these players are forced to export abroad leading to unnecessary trade wars and causing other countries to either limit ToTs with Chinese companies, or force Chinese companies to ToT to domestic players abroad.

This is the same story in PV Cells, Analog Chips, Mobile Phones, etc.