This is one of the thought-provoking pieces I've read lately on how China manages its economy, and why it ultimately creates more value for society overall. asiatimes.com/2024/07/chinas… Essentially the author - the mysterious Han Feizi (a pseudonym) - argues that the West looks at value creation primarily through the length of profitability and market capitalization, whilst China looks at it from a consumer and externalities standpoint. He explains this through a couple of examples. For instance solar panels, pointing out the fact that "America’s First Solar recently became the most valuable photovoltaic company" whilst "cutthroat competition in China destroyed margins". So which country created more value with regards to solar panels? Well, the author argues, "the fact that China’s photovoltaic companies are slaughtering each other by flooding the world with cheap solar panels is prima facie evidence of stunning policy success and value creation". Why? Because ultimately the value for society is to have lots of solar panels at very affordable prices, not trillion-dollar market-cap stocks... Much like "what we want from the butcher, the brewer and the baker are beef, beer and bread, not for them to be fabulously wealthy shop owners." In fact, the author argues, mega-cap valuations indicate that something has gone seriously awry. Do we really want tech billionaires or do we really want tech?" Same thing with EVs: the US ends up with Tesla which has a US$788 billion market cap, whilst China ends up with a huge ecosystem of over 250 EV models to choose from (the largest player, BYD, has a $93 billion market cap) in an insanely competitive environment. Ultimately Chinese companies sell way more cars than Tesla, they're much more innovative and, more importantly, we end up in a situation where close to 60% of cars sold in China are EVs, whilst in the US that's only 7%... So which system created more "value"? 🤔 As "Han Feizi" cheekily writes: "This writer thinks stupefied fanboys would be better off worshipping Elon Musk a little less and demanding affordable cars a little more, but that’s just my opinion." 🎯 And then there are externalities, which the author rightly says is the "more significant outcomes of industrial policy" in terms of value creation. When it comes to EV, externalities include "weening China from oil imports and lowering particulates and CO2 emissions". And when it comes to cheap solar panel prices they include "significantly lowering the cost of energy for the Global South with massive geopolitical implications". Isn't that value-creation? Of course it is, but that's not captured in a company's EBITDA or market cap... In the end this piece makes us go back to first principles: what is economic success, what is value creation? Maybe, just maybe, it's the approach that delivers the most tangible improvements in people's lives, instead of trillion-dollar companies and billionaire CEOs 🤷