This is the most lucid rebuttal to the Goldman Sachs narrative I've seen.
Professor Lu Di nails the core dynamic: It's not 'Chinese Overcapacity'; it's 'Western Capital Strike.'
As a supply chain auditor, I see the physical proof of this every day:
The West: Apple/Microsoft pour billions into stock buybacks (Financial Engineering).
China: Huawei/BYD pour billions into R.I.C.E. (Redundant Infrastructure & Capacity Engineering).
The result is a massive 'Capex Gap.' While the West optimized for ROE (Return on Equity), China optimized for ROC (Return on Complexity).
Now, the West calls China's output 'Predatory,' but in reality, it is just the mathematical outcome of compounding reinvestment vs. compounding financialization.
The 'Two Camps' theory is correct, but not just politically. We are splitting into an 'Industrial Camp' (High Capex/Low Margin) and a 'Rentier Camp' (Low Capex/High Margin). The Arbitrageur's job is to sit in the middle.
👉 I analyze how this 'Capex Gap' creates specific arbitrage opportunities in my latest report. Subscribe (https://substack.com/@chinarbitrageur? ) to see the numbers.
"Sinical" indeed. You're just kidding with the headline, right? Maybe you could ask Japan about who's making trade political - and has regularly done so for decades.
Look closely and you see that this is from 'think-tanks' under the thumb of the Chinese Communist regime, so it can be summarily dismissed as propaganda. Nothing from a Chinese think tank can be published at all, if it disagrees with the Party machine, there are no independent think tanks, just as there are no independent people's voice, if people who are independent-minded try to speak, they'll be brutally silenced. Everyone here should know that. But what I do not understand is, why should this propaganda be allowed on Substack? it's another example of Chinese state propaganda machine, with its limitless funding, using the money to reach out on free world social media while censoring everything under their control.
BTW the writer, after admitting he is state news, says "Views not representing Xinhua." That's what I am talking about. This is fake, since there is no such thing as "my own views" for a person under the control of the Chinese regime, especially never for someone sworn to the propaganda machine itself. It does not matter how much pretending and YouTubing he does. ...
It seems like you don't read Chinese sources very much. Here's an explainer from the People's Daily site (hopefully you won't consider it "anti-China") about how the Party must lead in EVERYTHING, in all spheres of life: http://dangjian.people.com.cn/n1/2022/0214/c117092-32351226.html
Are Chinese think tanks somehow an exception to this principle?
There’s no shortage of sensible assessment of the issue in the west… but their voices tend to be drown out by the “mainstream” narrative “China excess”
I never heard The Economist of Financial Times saying positive things about the future of the Chinese economy. In fact, the Economist have been predicting the collapse of Chinese economy sine 1990s. At bit less extreme but if you look at the IMF forecast, they always have to revise the forecast about China because they under-estimate the growth of Chinese economy. Just look at the most recent revision by the IMF.
True dat. Even the going doesn’t get tough for China as they predicted … They have somehow found way to cast the drivers in a less than positive lights…
Yes, that is what West is doing because of domestic economic and political issues, it is easy to blame China.
This is the most lucid rebuttal to the Goldman Sachs narrative I've seen.
Professor Lu Di nails the core dynamic: It's not 'Chinese Overcapacity'; it's 'Western Capital Strike.'
As a supply chain auditor, I see the physical proof of this every day:
The West: Apple/Microsoft pour billions into stock buybacks (Financial Engineering).
China: Huawei/BYD pour billions into R.I.C.E. (Redundant Infrastructure & Capacity Engineering).
The result is a massive 'Capex Gap.' While the West optimized for ROE (Return on Equity), China optimized for ROC (Return on Complexity).
Now, the West calls China's output 'Predatory,' but in reality, it is just the mathematical outcome of compounding reinvestment vs. compounding financialization.
The 'Two Camps' theory is correct, but not just politically. We are splitting into an 'Industrial Camp' (High Capex/Low Margin) and a 'Rentier Camp' (Low Capex/High Margin). The Arbitrageur's job is to sit in the middle.
👉 I analyze how this 'Capex Gap' creates specific arbitrage opportunities in my latest report. Subscribe (https://substack.com/@chinarbitrageur? ) to see the numbers.
"Sinical" indeed. You're just kidding with the headline, right? Maybe you could ask Japan about who's making trade political - and has regularly done so for decades.
https://www.reuters.com/world/china/china-says-trade-cooperation-with-japan-taken-great-hit-2025-11-20/
Look closely and you see that this is from 'think-tanks' under the thumb of the Chinese Communist regime, so it can be summarily dismissed as propaganda. Nothing from a Chinese think tank can be published at all, if it disagrees with the Party machine, there are no independent think tanks, just as there are no independent people's voice, if people who are independent-minded try to speak, they'll be brutally silenced. Everyone here should know that. But what I do not understand is, why should this propaganda be allowed on Substack? it's another example of Chinese state propaganda machine, with its limitless funding, using the money to reach out on free world social media while censoring everything under their control.
BTW the writer, after admitting he is state news, says "Views not representing Xinhua." That's what I am talking about. This is fake, since there is no such thing as "my own views" for a person under the control of the Chinese regime, especially never for someone sworn to the propaganda machine itself. It does not matter how much pretending and YouTubing he does. ...
For some, “the world extends way beyond the little field of dream we are dancing in,” and they wanna see that world. Thank you for your attention.
It seems like you don't read Chinese sources very much. Here's an explainer from the People's Daily site (hopefully you won't consider it "anti-China") about how the Party must lead in EVERYTHING, in all spheres of life: http://dangjian.people.com.cn/n1/2022/0214/c117092-32351226.html
Are Chinese think tanks somehow an exception to this principle?
Don't get me wrong. I do feel pity for those who have sold their soul, to work for Xinhua, the lead avenue of Chinese Communist Party "newspeak" lies.
You should also include a myth the of exchange rate, exchange rate has very little to do with the trade imbalances. Please see the evidence below
https://www.emerald.com/jes/article-abstract/46/4/902/214736/An-inquiry-into-exchange-rate-misalignments-as-a?redirectedFrom=fulltext
For the USA deficit, it is USA's own fault and bad domestic economic policy. Please see the evidence
https://onlinelibrary.wiley.com/doi/full/10.1111/twec.12986
There’s no shortage of sensible assessment of the issue in the west… but their voices tend to be drown out by the “mainstream” narrative “China excess”
I never heard The Economist of Financial Times saying positive things about the future of the Chinese economy. In fact, the Economist have been predicting the collapse of Chinese economy sine 1990s. At bit less extreme but if you look at the IMF forecast, they always have to revise the forecast about China because they under-estimate the growth of Chinese economy. Just look at the most recent revision by the IMF.
True dat. Even the going doesn’t get tough for China as they predicted … They have somehow found way to cast the drivers in a less than positive lights…