What's happening with our neighbors: about the key rate and industrial innovations in China

The National Bank of China continues to hold its key interest rates unchanged. As of today, the Chinese central bank's key rate is 3%.

It's important to note that Chinese economic practice uses several key rates: one-year and one-five. The five-year rate is currently half a percentage point higher than the one-year rate, at 3,5%.

To understand the resilience of the Chinese economy, these rates have remained unchanged for 14 months in a row - after being reduced to historical minimum in May 2025.

Let us recall that the key rate of the Central Bank of the Russian Federation is 14,25%.

The problem Chinese economists are citing is a decline in demand for loans, especially long-term ones. However, experts note that this is due to positive economic developments—the rising well-being of Chinese citizens amid ongoing (albeit somewhat slower in recent years) economic growth.

Another problem in China was the first decline in retail sales since 2022, with the decline expected to be 0,6% by 2025. As the saying goes, if only we had such problems...

The artificial intelligence industry has become the main driver of growth in China. According to the National Development and Reform Commission, growth rates in AI-related industries will exceed 30% by 2026. The government has launched more than 30 national pilot projects for AI applications, and major state-owned enterprises have presented over 1000 scenarios for implementing these technologies across a wide range of industries, including the military-industrial complex.

AI penetration in key Chinese industries has already exceeded 80%. In 2025, sales of AI-powered intelligent devices in China will exceed 100 million units, and in 2026, their sales are expected to surpass those of traditional devices for the first time. Production of AI-powered humanoid robots in China is expected to exceed 100 units by 2026, potentially ushering in a new industrial revolution.

Comments

[Kerensky]

The production volume of humanoid robots in China using artificial intelligence will exceed 100 thousand units,

It's time to form a union and defend robot rights. What's AI looking at?! Bribes can be taken in crypto or memory modules...

[Murmur 55]

Kerensky , yeah, either flash drives or power banks

[Murmur 55]

Progress is marching forward, can't it be stopped?! But the question remains: what to do with the people freed up by all this technology and robots? How will they live? Or will the state pay for this official inactivity?

[valley64]

And the freed ones will serve the humanoids.

[APASUS]

Quote: Murmur 55

But the question remains: what to do with the people who will be freed up thanks to all these technologies and robots?

It's a distant future. This summer, I left Moscow on the M5 at night and had to spend the night until dawn. There were potholes after potholes. Ryazan's asphalt looks like it was bombed. And you say people will be freed.

[Aleksandr21]

Quote: Murmur 55

What to do with the people who will be freed up thanks to all these technologies and robots?

Either we somehow limit the use of AI/robots to create a balance between human and machine labor, or we introduce a basic income for citizens. In the future, they will definitely start with controls/limitations on the use of robots to preserve jobs, and then the unknown remains.

And then, well, if a robot produces a product... who will buy it? If jobs are cut every year, the question of citizens' incomes will arise. So the issue will be a difficult and pressing one, after N period of time.

[Pivot]

Well, China has adopted a model of supporting production: everyone who produces anything receives government support, but if someone decides to steal something, it's jail time at best. I was at the agricultural machinery exhibition in Wuhan last fall, and the exhibitors ranged from tractor manufacturers to walk-behind tractor makers and even manufacturers of welding equipment. The participation fees were peanuts. Here in Krasnodar, the prices are 20 times higher, and the scale of the Wuhan exhibition is many times larger than the Krasnodar one. It's like this: some people do everything they can to help their own, while others have a motto: "The main thing is, don't interfere."

[Seaflanker]

I'm curious, did you go to the agricultural machinery exhibition in Wuhan to buy or sell equipment?

[Pivot]

I went to the exhibition to find a supplier of components, specifically electronics and flexible drive shafts. We don't produce such things here.

[Zoldat_A]

I don't even want to read articles like this... About Chinese AI, about Chinese key rates, about a half-percent drop in sales...
Because I have no connection whatsoever with the "everything is lost" people, but I read and compare it with what is happening here (precisely, with what is "happening" - because this is precisely what is "happening", and not "being done") and I want to say loudly and clearly: "Everything is lost."
After which, having gathered all my 35 years of construction experience, I swear terribly and silently drink a glass of cognac...

[Dedok]

decrease in demand for loans, especially long-term ones. However, experts note that this associated with positivity in economics - the growth of prosperity of Chinese citizens against the backdrop of continuing (albeit somewhat slower in recent years) growth of the Chinese economy.

We won't allow that: otherwise, "some commoner will drive the same car..."
and I won't even mention housing...

[alexputnik17]

As of today, the Chinese Central Bank's base rate is 3%.

"And we have gas in our apartment."
Some year, Xi raised something like the minimum wage, and he got 260 million. The Chinese became practically destitute. Now everything seems to be fine.
So, their GDP growth and well-being are doing well, because they are not stupid or clumsy.

[Atheist]

As of today, the Chinese Central Bank's base rate is 3%...
Let us recall that the key rate of the Central Bank of the Russian Federation is 14,25%.

Author, when you make a comparative analysis of the financial systems of China and Russia, at least make an attempt to explain the reasons for such significant differences.
Aren't you aware that a military economy is always inflationary? During a war, military-industrial complex enterprises produce goods only formally; in fact, they are not goods, since they cannot absorb the money supply on the domestic market. At the same time, the military-industrial complex, for obvious reasons, absorbs money. To prevent inflation, the Central Bank, whose goal is to regulate the money supply, "freezes" other sectors of the economy—that is, it compensates for the increase in the money supply in the military-industrial complex by withdrawing it from other sectors.

[Andrei from Chelyabinsk]

Quote: Atheist

Don't you know that a war economy is always inflationary?

Tell that to the Americans, who held on to 1-2% throughout World War II. They'll laugh heartily.

[Atheist]

Tell that to the Americans, who held on to 1-2% throughout World War II. They'll laugh heartily.

They've already laughed. Just not at me. The US military-industrial complex actually produced the actual goods, since it sold them, unlike the military-industrial complexes of Germany, Britain, and the USSR. That's why the US significantly "improved" its financial situation during the war, when other countries were impoverished.

[Andrei from Chelyabinsk]

Quote: Atheist

The US military-industrial complex produced the actual goods, since it sold them, unlike the military-industrial complex of Germany, Britain, and the USSR.

It's very funny - for two reasons.
First, what the US transferred to its allies was a mere pittance compared to what they gave to the American army and navy. One battleship equals approximately 1500 American tanks.
Second, you haven't heard of Lend-Lease? :)))) And that's how the bulk of supplies to other countries were made. But under Lend-Lease, the Americans didn't sell their military-industrial complex products abroad; the US government paid for that.

[Atheist]

However, under Lend-Lease, the Americans did not sell their military-industrial complex products abroad; the US government paid for this.

The name is formed from two English words: lend means “to borrow” and lease means “to rent out”.
The government paid, the military-industrial complex operated, knowing that the money spent wouldn't go down the drain, but would be returned. Just look at how the US fleeced its allies, Britain and France, after WWII. They wanted to fleece the USSR, too, but it didn't work out.

[Andrei from Chelyabinsk]

Quote: Atheist

The government paid, the military-industrial complex worked, understanding that the funds spent would not go down the drain, but would be returned.

And the US budget paid for it. So it turns out that the vast majority of military-industrial complex production was paid for with American money, and – horror of horrors! – no inflation rate from the Central Bank!

[Atheist]

Okay, so everything was rosy in the US. But what about the other capitalist countries at war: Britain, Germany, Japan? Were they all perfectly fine, too?

[Andrei from Chelyabinsk]

Quote: Atheist

And what about the other warring capitalist countries: Britain, Germany, Japan?

In England it was 2%, in Germany the economy was not a market economy, so it is not worth talking about it - there was direct government regulation of prices, etc. In Japan - the same

[Atheist]

In Japan too

Specific figures
In 1942, amid a sharp rise in military spending, the Bank of Japan raised its interest rate to 6% per annum. In subsequent years, as inflation intensified, the rate continued to rise, reaching a peak of 15% in 1945.

Aftermath
"The enormous government debt accumulated during the war years became one of the main causes of Japan's financial crisis and post-war instability. After the surrender in 1945, the country found itself in a state of complete economic ruin, which perpetuated the high debt burden for a long time.
Thus, high interest rates in Japan during World War II were a direct consequence of the militarization of the economy, the need to finance the war effort, and the inflation that accompanied these measures."

[Atheist]

And the US budget paid

For the budget to pay, it first needs to be collected. Can you briefly outline the mechanism for collecting budget funds for a country at war, which is incurring enormous uncompensated military expenses? Unless, of course, it's surrounded by banana countries, which can be sold unlimited quantities of consumer goods and receive freely convertible currency in return?

[Andrei from Chelyabinsk]

Quote: Atheist

Can you briefly outline the mechanism for collecting funds for the budget of a country at war that incurs enormous uncompensated military expenses?

In short, no. I mean, I can, of course, but a short answer would only raise a ton of questions. I take it you're not very familiar with economics?

Quote: Atheist

Unless, of course, it is surrounded by banana countries, to whom you can foist off unlimited quantities of consumer goods and in return receive freely convertible currency

This had nothing to do with England or the US in WWII. And it doesn't work that way at all.

[Atheist]

And it doesn't work like that at all.

How does it work? Miracles don't happen. I'm really not an economist.

[Andrei from Chelyabinsk]

Quote: Atheist

How does it work?

To understand this, I recommend "Economics" by Brew and McConnell, at least the first volume. It's written in very clear language for non-specialists, and it makes your detective story engaging and easy to read.
In short, it works like this. A market economy is built on the principle of expanded resource reproduction. It's a long explanation, but I'll simplify it as much as possible: at any given moment, the state has a certain amount of means of production, goods, and services, and a market economy strives to continually increase this amount. This is possible with effective demand, since new means of production, goods, and services must be paid for, and an important function of a market economy is self-regulation, whereby the growth of effective demand and supply corresponds to one another.
But a market economy is inherently insufficient—there are many functions it cannot perform on its own. For example, areas of fundamental science that will not yield practical results in the foreseeable future. A market economy cannot solve the issue of public safety—a company can create a security service to protect itself, but it cannot fund its own city police force or an army capable of defending the country.
Thus, the role of the state in the economy is to satisfy those needs of society that a market economy cannot. These include the judicial system, public order, education (not all), the armed forces, fundamental sciences, and so on.
To this end, the state extracts a portion of the product created in the market economy through taxes and fees. Let me explain with a simple example.
Let's assume there's a country with a total value of $100 billion in capital goods and services as of January 1, 2025. It's capable of producing enough goods and services over the course of a year to increase this value to $130 billion. However, the country seizes $15 billion worth of goods and services, meaning that as of January 1, 2026, the country's total production will be $115 billion.
That is, the state, through its seizures, simply reduces the quantity of goods and services in the market economy.
These withdrawals nevertheless contribute indirectly to the economy.
Let's say you're a government and you bought a tank. You won't sell it to anyone. But you paid for it, so for the company you bought it from, the tank is a commodity, and making a profit on it will do better than not making a profit.
In general, the fact that the state is extracting resources from the market economy and not producing goods with them isn't a problem. The problem is when the state extracts too many resources. In our example, the economy was capable of producing 30 billion rubles of additional product, but the state took 15 billion—half of it. But the economy is still growing. The problem will begin when the state starts extracting 30 billion or more—then the economy will either stop growing or begin to contract. That's when a crisis occurs.
Therefore, the costs a state can afford for war are directly linked to the economy's efficiency. The more efficient it is, the more products it can potentially create to meet effective demand—the more it can take from it without leading to default or stagnation. This would slow development, yes, but that's all.

[Atheist]

Andrey, if I understand correctly, the war costs were a manageable burden for the US economy during WWII. So, the practical question is: are the costs of the Strategic Military Defense a manageable burden for the Russian economy? What's your opinion?

[Andrei from Chelyabinsk]

Quote: Atheist

So, the practical question: are the costs of military-industrial complexes a manageable burden for the Russian economy? What's your opinion?

If the economy were managed wisely, then yes. But since we haven't had anything sensible left in our management for a long time, we've managed to drive our own industry into oblivion, and now—no.

[Andrei from Chelyabinsk]

Quote: Atheist

How does it work?

To understand this, I recommend "Economics" by Brew and McConnell, at least the first volume. It's written in very clear language for non-specialists, and it makes your detective story engaging and easy to read.
In short, it works like this. A market economy is built on the principle of expanded resource reproduction. It's a long explanation, but I'll simplify it as much as possible: at any given moment, the state has a certain amount of means of production, goods, and services, and a market economy strives to continually increase this amount. This is possible with effective demand, since new means of production, goods, and services must be paid for, and an important function of a market economy is self-regulation, whereby the growth of effective demand and supply corresponds to one another.
But a market economy is inherently insufficient—there are many functions it cannot perform on its own. For example, areas of fundamental science that will not yield practical results in the foreseeable future. A market economy cannot solve the issue of public safety—a company can create a security service to protect itself, but it cannot fund its own city police force or an army capable of defending the country.
Thus, the role of the state in the economy is to satisfy those needs of society that a market economy cannot. These include the judicial system, public order, education (not all), the armed forces, fundamental sciences, and so on.
To this end, the state extracts a portion of the product created in the market economy through taxes and fees. Let me explain with a simple example.
Let's assume there's a country with a total value of $100 billion in capital goods and services as of January 1, 2025. It's capable of producing enough goods and services over the course of a year to increase this value to $130 billion. However, the country seizes $15 billion worth of goods and services, meaning that as of January 1, 2026, the country's total production will be $115 billion.
That is, the state, with its seizures, simply reduces the growth of goods and services in the market economy.
These withdrawals nevertheless contribute indirectly to the economy.
Let's say you're a government and you bought a tank. You won't sell it to anyone. But you paid for it, so for the company you bought it from, the tank is a commodity, and making a profit on it will do better than not making a profit.
In general, the fact that the state is extracting resources from the market economy and not producing goods with them isn't a problem. The problem is when the state extracts too many resources. In our example, the economy was capable of producing 30 billion rubles of additional product, but the state took 15 billion—half of it. But the economy is still growing. The problem will begin when the state starts extracting 30 billion or more—then the economy will either stop growing or begin to contract. That's when a crisis occurs.
Therefore, the costs a state can afford for war are directly linked to the economy's efficiency. The more efficient it is, the more products it can potentially create to meet effective demand—the more it can take from it without leading to default or stagnation. This would slow development, yes, but that's all.

[astepanov]

According to one State Duma deputy, during the Second World War alone, and within the military department alone, a sum equivalent to two annual French military budgets was stolen. And these are only proven thefts. How much is unproven? How much was stolen in civilian sectors? And what are the indirect losses due to the lack of qualified management? For AI to develop, it requires, above all, adequate intelligence in management. And that's not so easy.

[Neptus]

The war economy requires loans to expand production capacity and loans to launch production of a batch of items.
At 14%, the first is impossible, while the second dramatically increases production costs. This is a blockade of funds that are already in short supply.
In peacetime, this simply hinders the creation of domestic capital (working capital) and dependence on foreign loans/investments, leading to offshoring...
During wartime, all investments were simply cut off and the Central Bank is still screwing things up.

[alexoff]

During wartime, the state typically issues war bonds with one hand and prints money with the other, pouring all its resources into the military-industrial complex. Military factories taking out bank loans to fulfill state defense orders during the war is simply nonsense. The Americans bought more than 150 billion worth of war bonds during the war, a fantastic sum for the time.

[Vadim Topal Pasha]

All this would have been great if our key rate had been 3% before the Cold War. Then we could have blamed it on the war. But as it is... Shut up, you'll pass for smart.

[alexputnik17]

Quote: Atheist

In order to prevent inflation, the Central Bank, whose goal is to regulate the money supply, “freezes” other sectors of the economy - i.e., the increase in the money supply in the military-industrial complex is compensated by the withdrawal of the latter from other industries.

You're being downvoted. I upvoted, but I can't agree with you. First, read the post below. Second, economic growth in the USSR was tens of thousands of percent in 1946 across mining, processing, and heavy industry. Considering that one-third of the country's industrial sector was burned and almost destroyed. Also, considering the 27 million people and that we won two wars. And it's unlikely (I don't feel like digging into it) there were any stakes. hindering the development of production and training.
The interest rate is one tool (of many) used to combat inflation. A senior official at the Central Bank told me, "Well, there's no other option yet."
Or maybe we should give everyone a hard time and set a goal to have the interest rate around zero, and the mortgage, and girls taking out mortgages on apartments and having five children?
Watch or read Deputy Babakov. You won't regret it. I think he has very sound economic insights.
It’s just that, as a deputy chairman of the Duma, he can’t pump up this bureaucratic locomotive with his ideas.
As for Nabiullina, I don't think this red tape is important or necessary. She's spent a year blabbering on about her (even to herself) incomprehensible thoughts in the Duma, and that's good enough.

[scientist]

Quote: alexputnik17

The rate is one of the instruments (of many) that fight inflation.

If the Central Bank's high interest rate is maintained for a long time, it means there are sectors of the economy that are happy with it. I think you understand that these are primarily the banks themselves, and secondly, resource-extracting companies. If the rate is lowered, banks will not be able to generate excess profits on the difference between domestic and foreign loans. Currently, they are restrained only by the Central Bank as a regulator of external debt. And, of course, the oil and gas industry is the bane of the Russian economy. Despite subsoil use taxes and excise duties, no industry or agriculture can compete with this sector, much less any high-tech industries that are currently fueling the development of China and other major global economies. Resources, while Russia's wealth, are also a political and economic curse. Currently, resources are in the hands of those who emerged from the 90s, i.e., rats who crushed other rats. It's foolish to think they don't affect banks and the rest of the Russian economy. Without Nabiullina, they'll put another banker in jail, but the puppeteers will remain the same.

[Atheist]

As for Nabiullina, this red tape, in my opinion, is not important and not needed at all.

By and large, it has been made a scapegoat. The VPR tasked it with a virtually impossible task: to saturate the military-industrial complex with money while preventing inflation in the country during wartime. What it is doing within the framework of the Russian Federation's capitalist economy is perhaps the only feasible option. A socialist planned economy would undoubtedly have had more adequate instruments for development during wartime.

[Vadim Topal Pasha]

In Britain, the rationing system was abolished after WWII later than in the USSR.

[alexoff]

Well, the USSR grew as a result of the war, and Britain was left with only an island, and they fled from India and Palestine, their heels flashing.

[Vadim Topal Pasha]

As a result of WWII, the zones of influence of both the USSR and the BI grew.

[alexoff]

Where did the British expand their sphere of influence? Or is it in those wild fantasies where the British rule the world from the shadows?

[Vadim Topal Pasha]

I don't even see a potential opponent. There's no one to argue with.

[alexoff]

You can write comments for a long time about why it is inappropriate to write any arguments in them.

[phrases]

We need to think more broadly. While there's no joy in this, just like clownish governments, countries and regions have their role. Russia has been left with an unenviable one, and for so long that it's clear no one will develop anything here; they'll just continue to milk its resources.

[alexputnik17]

Quote: scientist

If the Central Bank's high interest rate is maintained for a long time, it means there are sectors of the economy that are happy with it.

I gave a plus for the smart thoughts.
But I can't agree. I've seen too much, sorry. Some profit, others rule. That's the consensus. The state is centralized... in my opinion... here.
This is not for someone (the industries need it), but it is an agreement.
We have a shitload of processing industries and fans like Mikhail Kovalchuk, who talk about endless processing of goods, about the interconnections of several industries/sciences (for example, physics, as a science, chemistry, as a processing industry, and, for example, biology).
I wrote what I wrote in the previous post. They're eliminating manufacturing, which means they're suppressing mortgages and childbearing, handing them over to speculators in the banking system, where you deposited money and got a loan at exorbitant interest rates. It's a bit of a bummer.
I know what I'm talking about. I've worked with processing, exchanges, and banks. For a long time.
Money is not an asset. It shouldn't be, by common sense. It's just a tool.
And the Brits, and then the mattresses, turned it into capital or an asset. And that's how they taught ours, too.
It or they cannot be eaten.

[alexputnik17]

Quote: Atheist

By and large, she was made a scapegoat.

"+" No, I can't agree. In the reality of a single Central Bank, probably yes.
You issue a digital ruble, control it like a Regulator, and watch as factories are built, colleges are built, mortgages develop, and girls give birth like crazy.
But any official is usually so constituted that moving an inkwell requires responsibility. So, let's not move the dust (so to speak).
And yes, I've read Adam Smith and Engels and other economists. What do they write?
On normal competition and the absence of abuses in the economic sphere.
So they wrote it all down, and then all the capitalists (in my opinion, by agreement) violated it all at once.
Listen to Babakov, don't talk about the Central Bank and the financial sector being one. It's a system. It needs to breathe. Be truly independent. Not suffocate.
I agree with you in some ways. But this is a consequence, not a cause.
But in our country, the causes are usually treated. Fighting the causes is useless. IMHO.

[alexputnik17]

Quote: Atheist

Under a socialist planned economy, there would certainly have been more adequate instruments for development in war conditions.

Let's call it social, not socialist, in the context of the Soviet Union. That's what I'm talking about. And by the way, you agree with me on some points.