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0 pointsstarfallg4y ago0 comments

China is rapidly heading towards the middle-income trap. All of the positioning in the past decade is in the hope of avoiding it. This is a massive challenge as the prosperity of the upper classes is based on cheap labour. All of the advanced economies overcame this by moving jobs up the value chain. China can't easily to do this due to its massive population, a large part of not very well educated. There is a real risk of social instability when semi-skilled jobs dry up.

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dragonelite4y ago

I 100% believe that the main reason a country stays stuck in the middle income trap is its capability to create high tech IP which the nation can use to suck up what I would a global rent for lending out its IP.

That why the patent system is so toxic for the global south its like cutting off the steps on the value chain stair.

throwaway4good4y ago

10 years ago people were also chatting about China being caught in the middle income trap because China was unable to create its own global brands and original products, and was destined to be a cheap factory for western brands forever, never would be rich enough to have an internal market.

Today we have global brands like Xiaomi, Huawei, Tiktok in every corner of the planet.

And there is just going to be more of it.

starfallgOP4y ago

Middle income trap doesn't have much to do with global brands. It has to do with whether there is enough capacity to absorb excess labour when economic growth necessitates transition away from agriculture and manufacturing to service and information industries.

Export driven growth is also very risky as geopolitical issues (as we can see now with Huawei) can happen on a dime. In order to develop China up to western standards, the world needs to supply resources for a population well over all the western countries (EU+US+CANZUK+Asian Tigers) combined. All of the countries that have achieved had good relationships with their importing trading partners, China on the other hand is moving in the opposite direction due to political reasons.

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dragonelite4y ago

When I visited family in the Philippines every dam mall or street market I visited you saw Oppo, Vivo, Huawei and Apple stands. It was kind of a shock compared to here in western Europe.

And from what I can gather Chinese EV car brands are now just entering the European markets. The EV car market has pretty much has been a hard reset of the car industry where new players and old player need to duke it out. Its kind of exciting as someone with a Asian background to see so much happening in Asia to the point im planning on using the next 3~5 years to learn to read and listen to spoken Chinese. Just so I don't have to see it all through a western politically and racially biased lens.

starfallgOP4y ago

What's important is high-value jobs. You need these to transition excess labour away from unskilled and semi-skilled jobs. The key is creating and sustaining these jobs.

Obviously tech is a part of this, but also financial services as well as resource/energy industries. IP is less of an issue than it first seems, it's the ability to execute in a market that is more important.

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dragonelite4y ago

That why the patent system is so toxic for the global south its like cutting off the steps on the value chain stair.

throwaway4good4y ago

Today we have global brands like Xiaomi, Huawei, Tiktok in every corner of the planet.

And there is just going to be more of it.

starfallgOP4y ago

1 more reply

dragonelite4y ago

When I visited family in the Philippines every dam mall or street market I visited you saw Oppo, Vivo, Huawei and Apple stands. It was kind of a shock compared to here in western Europe.

starfallgOP4y ago

What's important is high-value jobs. You need these to transition excess labour away from unskilled and semi-skilled jobs. The key is creating and sustaining these jobs.

j / k navigate · click thread line to collapse