Are the increasingly tight capital controls a precursor to a war with Taiwan or because the CCP expects some other shock to occur? Is their economy expected to crash for some other reason or is this simply dictatorships love centralised control over everything especially capital?
Could be all of the above, but for at least a year I have been reading how the real estate bubble that's underpinning the Chinese growth economy is starting to pop with the potential to bleed into the banking system, e.g. [0]
If this happens, and is at bad as some analysts say it could be, then the model propping up the CCP effectively ends [1] and they'll have bigger things to worry about than re-unification or tariffs.
And that in turn might cause them to start a war... Because when the regime has nothing to lose all bets are off, even though it makes no sense whatsoever. They will have to distract from their culpability somehow.
My grandfather was an old Russian whose views on dealing with USSR boiled down to détante, or in his immortal words, "once they have a pot to piss in, they won't fight..."
The flipside to that is, China does now have a pot to piss in, and is far less likely to be kettled into a war over something as stupid as an overabundance of crappy housing.
Does this mean "once the people have a normal life, they won't want a war?"
I am seeing the opposite. All dictatorships seem to start getting land conquest ideas once they have the resources. There is a direct correlation between Russia's cash reserves and their belligerence, for example. China is becoming one man, just like Russia is Putin, and it's also becoming a less rational actor as the result.
Allowing the housing bubble (which seems to have enriched those close to the party), punishing the tech sector for their own success, the completely baffling Zero Covid. At some point it's the dear leader's ego and quest for "legacy", not the economy.
Except if they think there is a significant likelihood they will lose, which would guarantee the downfall of the regime. The Argentinian junta thought the UK would be unable to respond to their invasion of the Falklands (and if they had waited a couple more years, they may well have been right), but I doubt China dismisses the US out of hand, specially after the sobering experience of Russia in Ukraine.
>The Argentinian junta thought the UK would be unable to respond to their invasion of the Falklands (and if they had waited a couple more years, they may well have been right)
Because of elections or ships and planes being retired?
Well, sure, it took quite a while for the British Navy to get there - they didn’t have ships or planes nearby.
But the UK economy wasn’t doing well and Margaret Thatcher was very unpopular especially with the working class. I doubt many British people cared that much about the Falklands and wouldn’t have minded if they had let it go.
But I think an awful lot of the British, and even Americans and Europeans, were completely shocked that Thatcher would not, under any circumstance, tolerate an invasion of British territory - even unwanted territory!
Had the Argentinians waited a few more years, the British may have just given the islands to them.
The ever centralisation around one man is incredibly short sighted. The Chinese system used to be much more sophisticated, having both a very capitalistic view of the world and a very communistic view. They have completely lost half of that and even the communism will disappear if things start going wrong - all that will be left is maintaining the dictatorship at all costs.
Deng Xiaoping created the seeds of destruction for his reforms when he crushed the peaceful democracy protesters in Tiananmen. This has led to mess after mess with Jiang Zemin, leading eventually to the biggest disaster of them all: Xi
In an alternate timeline, one can imagine what a democratic China would look like:
- Silicon Valley would have been long overtaken by Shenzhen
- Chinese media would have been a strong rival to South Korea’s
- the Chinese domestic market would have been opened up to the world long ago
- Taiwan would willing reunify with the mainland. There would be no looming war
> - Taiwan would willing reunify with the mainland. There would be no looming war
From what I've been told the younger Taiwanese tend to see themselves as Taiwanese, not Chinese. If mainland democratization happened early enough, maybe, but I don't see what a small country in Taiwan's position has to gain by merger with a larger one.
> - Silicon Valley would have been long overtaken by Shenzhen
To the extent the markets were fairly free before Xi's heavy handedness, why didn't this happen yet anyway? Silicon Valley is kind of unique even in the USA. I've read this is because of particularly startup-friendly California laws. Is there reason to believe these startup-friendly laws would have been duplicated in Shenzhen? Or some other reason to believe Shenzhen would have turned into a Silicon Valley rival otherwise?
> - the Chinese domestic market would have been opened up to the world long ago
Anti-import policies are adopted by democratic countries too.
> From what I've been told the younger Taiwanese tend to see themselves as Taiwanese, not Chinese.
That was cemented once Xi started being reckless, leading to the end of the one China two systems policy. Prior to Xi, it wasn’t as black and white.
> To the extent the markets were fairly free before Xi's heavy handedness, why didn't this happen yet anyway?
You just answered your own question. Under authoritarianism, the government can abruptly shutdown the party at any moment for any arbitrary reason. There’s no rule of law that comes with a democracy. Also innovation needs freedom of speech. There is a cost to society and business when you’re constantly having to self censor yourself
> Anti-import policies are adopted by democratic countries too.
Sure, the EU has a lot of protectionist laws, but they don’t even come close to CCP’s draconian version
I hesitate to say this because I'm certainly not in favour of crushing any democracy movements. But it is hard not to think that a different alternate timeline could resemble what has happened in Russia after Gorbachev did not crush the democracy movement.
Jiang was very pragmatic, and the world likely wouldn’t be in this mess if he was able to hold onto more power longer. However, Jiang was also extremely corrupt, and he wanted to hold onto power longer than the terms set by Deng. The man would constantly try to assassinate rivals like Hu and even Xi, which is what led to Xi’s ascension. Hu was much better, but he was also instrumental in Xi’s rise.
Jiang’s Shanghai faction also took the lion’s share of funding, more of which could have gone to the inland provinces
None of this would likely happen if China transitioned to a democracy.
There is a fair chance of that happening. But: The cult of the individual leader has always been a strong component in China historically. So it wouldn't be a new thing, more a regression to the norm.
It's been a strong component the world over. Even in the US we've got exemplars such as George Washington, FDR, and the Adams and Bush dynasties. Democracies as political-individual-leader absent as Switzerland are the exception, not the rule. And the less so for other forms of government.
Oh sure. The US governmental structure doesn't easily allow dictators. And it's much easier for an FDR-like fellow to rewrite the Chinese constitution to allow a dictator than to so rewrite the US one.
FDR was probably as close as we got to a Xi like figure, who was able to bend the Supreme court to his will by realistically threatening to pack it.
It's incredibly pragmatic, Chinese system was shit show in the 80s-10s going after easy gains while building up onerous contradictions. A lot of toes needed to be stepped on to do something as basic as military modernization, meanwhile Xi hasn't even aggregated enough political power to pass wide scale property tax. The issue isn't Xi centralizing power, but power was never sufficiently centralized, and in many ways, still isn't.
That's entirely on you then. I'm free to notice a pattern between countries led by individuals that are failing economically and what is happening in China and to see a war as one of the possible outcomes. That's - unfortunately - a realistic option, it may not have very high odds but they definitely aren't zero. Internet fora are a place where such speculation will happen and for that to happen the odds are allowed to be a lot lower than those for China at war. And if such speculation turns out to be baseless than so much the better. If you're willing to put up a hard guarantee that this can't possibly happen I'd like to see some hard evidence as to why you believe this to be the case. I'm sure it would make lots of people sleep a lot better.
The person you're replying to said this might cause China to start a war. He did not say it was a sure thing, he simply said this is how things often are.
In no way was the comment china-man-bad xenophobia.
Yeah, I have been watching the mess that's the Chinese real estate market for ages and it's insane. Rent should be something like the mortgage payment on a property--but it's like 10% of a mortgage payment. The government is determined to keep the growth rate up--despite the fact that an advanced economy can't maintain the sort of growth rate developing economy can.
The people can see the market is dangerous but allowing the money to flee to safer locations would crash the market and that's unacceptable. Hence things like capital controls. It's not the hardcore efforts to get foreign currency that we saw in the old days, but it's still an issue.
It's impossible to take your second "source" seriously since it's a dude that literally went to school to learn war games and worked at a think tank affectionately known as "The Shadow CIA" that effectively profits by pushing a narrative of foreign countries being violent.
That possibility makes me really nervous. A few weeks ago I was pretty sure that Beijing would not be that stupid, and simply stick with sending tons of dual-use goods, to keep up the plausible deniability.
But Chinese rockets hitting Ukrainian kids in Kyiv/Europe? That would trigger dramatic sanctions. I don't think that is priced into the current world stock market.
> But Chinese rockets hitting Ukrainian kids in Kyiv/Europe? That would trigger dramatic sanctions. I don't think that is priced into the current world stock market.
Short term this would wreck western economies worse than the 2007 crisis.
Long term, it would be the end of China and give a massive boost to western economies. In the mainland it would mean massive stagnation/industry collapse as manufacturing is moved to pro-western southeast Asian countries. Millions of unemployed and unmarried (thanks to out of control population control policies) aggressive young man roaming the country with no hope to emigrate thanks to sanctions. Add food insecurity to the mix, since some countries exporting food to China might re-consider their allegiances not to get sanctioned as well and it would spell disaster for the regime.
High net worth individuals getting their foreign assets seized for double allegiance in the west would provide relief to native home buyers and free so much capital to be spent on consumptions good, to soften the blow of higher production costs because of re-shoring.
> A few weeks ago I was pretty sure that Beijing would not be that stupid...
The US is executing the same broad strategy against both China and Russia - surrounding them with US-friendly states who then get military support. It seems to be working extremely well against Russia since they can barely get Russian troops into the Donbass safely.
While I, personally, agree that it would be stupid I can certainly see that situation from the perspective of a hypothetical Chinese military planner. A destabilised Russia would potentially have a colour revolution leading to a US encirclement on 3 compass points. China would therefore have no choice but to support the war effort against Ukraine.
Were the countries around China coerced to be friendly with America somehow? I’m pretty sure the CIA do a lot of evil shit to maintain American power around the world but I’m really not sure they are this omnipotent. I think these countries are simply more scared of China than they are the US, until that changes China will be surrounded by US friendly countries.
The point that roenxi made is that color revolutions in Russia and Kazakhstan would encircle China from the West and North in addition to the existing U.S. allies Japan and South Korea from the Southwest.
It isn't a moral statement, just one realistic scenario that China is afraid of.
You’ve pretty much eliminated all agency that exists in those countries and their people.
This is the only way to support Russia and China today. By using a “Great Power” theory which pretends smaller countries have no agency and their people have no value, other than how they affect the interactions of those larger countries.
The U.S. is also surrounded by a bunch of countries. Somehow those countries aren’t clamoring to join the Warsaw Pact or kowtow to China.
There's no power close to the US that could counterbalance it.
If there was an equivalent south American power, you might see Mexico and central American countries looking to escape American influence, but no such power exists
Yes. Japan lost WW2, and was forced into said agreement, and then the US went to war in Korea.
That doesn't mean that dealing with the US isn't better than dealing with China, of course, but the US military bases are there to ensure that the empire stays intact, both from external attacks and internal division
I think you’re ignoring the fact that China has been very aggressive with its border claims in the Pacific. Under Xi, they’ve literally invaded small islands controlled by south East Asian countries. It’s more than enough to push countries like Vietnam to the US.
> The US is executing the same broad strategy against both China and Russia - surrounding them with US-friendly states who then get military support. It seems to be working extremely well against Russia since they can barely get Russian troops into the Donbass safely.
What US-Friendly states are between Russia and the Donbass then?
I'm just pointing out that the way you phrase it makes it sound like: "[robbers has a legitimate concern that] with all these cops and all this cameras and security doors they can hardly pull off a heist any longer"
You probably won't read this after 4 days, but the way I was phrasing it was solely meant to show that the rhetorical question asking what states are between Russia and Donbas (none) is irrelevant to the point the original commenter was making.
I think he meant that Russia is pretty much surrounded by NATO allies, excluding of course China and this is something Russia is not to happy about (stated this many times in the past as NATO was expanding).
> Bordered by Russia and China, Mongolia describes the United States as its most important “third neighbor.” In 2019, the United States and Mongolia upgraded their bilateral relationship to a Strategic Partnership.
> Mongolia deployed troops to Iraq from 2003 through October 2008. In Afghanistan, Mongolian soldiers supported Coalition operations for 18 years, with withdrawal underway in 2021 in coordination with the planned exit of U.S. forces. Training and equipment provided by the U.S. government support the professionalization of Mongolia’s defense forces and their continued engagement in United Nations peacekeeping operations. The United States military also regularly participates in Mongolia-hosted peacekeeping and humanitarian relief exercises, including the annual Khaan Quest exercise.
> In the years since Kazakhstan’s independence, the two countries have developed a strong and wide-ranging bilateral relationship, jointly referred to as an enhanced strategic partnership since 2018.
> Kazakhstan’s military participates in U.S.-funded military exercises like Steppe Eagle, Viking, Eager Lion, and Shanti Prayas.
---
> North Korea
The Russian border with North Korea is about 20 miles long.
> For 20 years, Iranian officials have said they wanted the U.S. military out of Afghanistan. Iran supplied Afghan insurgents with weapons to use against American soldiers. It sheltered Al Qaeda’s top leaders in Tehran. It courted the Taliban with diplomatic visits, covertly and then publicly.
The best I can find is an "enemy of my enemy" relationship, which has never been considered an alliance.
>For decades, Tehran has supported the Hazara, a Shia minority and the third largest ethnic group in Afghanistan. In the 1990s, the Taliban government repressed the Hazara—excluding them politically, isolating them economically, and killing more than 1,000—during the civil war that erupted after the 1989 Soviet withdrawal. Tensions heightened in 1998, when the Taliban killed nine Iranian diplomats working at a consulate in northern Mazar-i-Sharif. After the 9/11 attacks and the U.S. invasion of Afghanistan, Iran worked closely with the United States and regional powers to establish a new Afghan government free of the Taliban.
> Iran’s relationship with the Taliban shifted, however, as U.S. and NATO forces stayed in Afghanistan. Tehran viewed the Taliban as a useful tool to counter U.S. influence on its borders. It provided Taliban forces with enough military equipment to pressure the United States but not enough to generate American military retaliation. In 2016, the Taliban chief, Mullah Akhtar Mansour, was killed in a U.S. drone strike as he returned from a secret visit in Iran to his sanctuary in Pakistan. By 2017, Russia reportedly used Iran to funnel weapons to the Taliban.
I think they were planning to set up a puppet government as a buffer. Throw out the "nazis", "restore" the "rightful" something something... even just making the Donbass republics a real thing would have helped. Reality intervened, obviously. I bet they weren't betting on Finland bidding to join NATO, either.
They have the worlds largest stockpile of nuclear weapons… nobody has adequately been able to explain how NATO or someone else would invade such a country.
Ukraine joining NATO has been a hotbutton topic for the last 10 years. It was decided 6 months before the invasion that it would Ukraine would join, and I don't the two facts are entirely unrelated.
You can't join NATO if you have an ongoing territorial dispute. Ukraine would have been unable to join while Crimea and parts of Donbass/Luhansk were occupied.
I agree this has been a prerequisite for full NATO ascension so far. However, The process starts with a promise of NATO membership which was given. Since 2014 NATO has has operated several trust funds and aid packages to modernize the Ukrainian military. There has also been a NATO/US presence in Ukraine, training, and joint exercises.
Prior to the war, Ukraine sought entry despite ongoing conflicts, claiming "NATO is the only way to end the war in Donbas".
Since the start of the war, Former US Ambassador to NATO and others have called for Ukraine to be offered membership, despite territorial conflicts.
It's very baffling why, after Russia conducted multiple invasions of bordering countries, the states elsewhere became "US-friendly". Russia is the victim. Yes? Thirteen time zones of territory, and their prime time TV is filled with sadistic dreams of marching into Europe, and we know what happens when the Russian army comes. It's just.... a mystery.
The obvious question should be is why states around Russia and China choose to be U.S. friendly, whereas states around the US also choose to be US friendly.
For example, why does Canada KK pose restrictions on China despite them investing a ton of money in Canada, and the Philippines, barring a short neutrality under the ridiculous Dutarte also chooses to impose restrictions on China, and be closer to the U.S., despite China also investing a ton of money in them and being closer to them.
Well first, match context, there's neighbouring countries and regional countries. Countries neighbouring PRC, i.e. land connected are just as friendly towards PRC, and by friendly I mean relatively geopolitically aligned because PRC settled borders with 12/14 of them (India/Bhutan hold out) and they know they're too close to PRC to step out of line. This is similar to US, except US who only has 2 land neighbours, CA/MX, both of whom she knocked the shit out historically into compliance. The you have regional countries, expecially once limited to maritime access, they hedge, just like South America is now hedging PRC against previously almost uncontested US influence.
The broader answer is because PRC hasn't (had chance to) done what the US did, kick the shit out of their neighbours or exploit shit kicked countries near their adversaries and coerced geopolitical compliance that over generations becomes ingrained on a cultural level. PH/JP/SKR/TW are structurally coupled to US post WW2, and all had very strong anti-US sentiment across society and politics earlier on in their existence, but lacked power to kick US out and generations of US influence and increased dependence in more than just economics now makes them bias compliance towards US interests.
Canada good example, used by British to wage existential war on US, and US seriously considered annexing Canada until British was comprehensively defeated and Canada stopped becoming geopolitical threat. Even then Canadian domestic politics was antiUS project until well into the 70s, meanwhile anytime Canadian leadership tried to depart from US strategic interests, it gets reigned in. Ditto with Mexico, and rest of Americas via Monroe Doctrine.
The TLDR is US empire wasn't built on friendship, it was built on opportunistically ruining / exploiting ruined countries and turning them into vassels structurally to be friendly, until over generations, people start drinking the koolaid and the cause becomes reversed. Alternatively, like in South America, beatings will continue until geopolitical compliance improves. Money and influence ops is rarely enough to dislodge such alignment. Which raises the unpleasant implication that countries around PRC won't be friendly until PRC successfully asserts regional hegemony and it can't convincingly do that without basically kicking US out of east Asia forcefully. Sometimes the only way to win over geopolitical "friendships" is by kicking the old friend out and demonstrating implications of trying to remain unfriendly.
>surrounding them with US-friendly states who then get military support
As is the standard playbook of dictator/authoritarian apologism, you completely reverse causality here and deny non-authoritarian countries self-determination. The US isn't "executing a strategy" or "surrounding [Russia/China]", it's that Russia and China are engaging in terrifying behavior, attacking and undermining their surrounding countries, promoting a pure might-makes-right and historical grievance narrative, making vast claims over neighboring countries sovereignty with their "spheres of influence" and China's ludicrous ocean claims, and on and on. And as a direct result their neighbors are banging on the door to get into Western security agreements they see as being able to defend them! NATO was falling apart. European military capability has massively decayed. Much of Europe was completely content to make occasional noises but otherwise pursue economic integration above all else. What has changed everything has been Russia and China's actions.
Taking that and reversing it into a "woe is me why is everyone so mean" story is gross.
>While I, personally, agree that it would be stupid I can certainly see that situation from the perspective of a hypothetical Chinese military planner. A destabilised Russia would potentially have a colour revolution leading to a US encirclement on 3 compass points. China would therefore have no choice but to support the war effort against Ukraine.
Here's an alternative thought: Russia just fucking LEAVES UKRAINE. Stops committing mass murder, rape, genocide, child abduction, theft, purposeful destruction of civilian infrastructure, and war crimes in general. That China NOT invade an independent democratic country like Taiwan. That they stick to international treaties and norms and focus on making themselves rich and happy. That ever occur to you? Apparently not. Hopefully "Chinese military planners" aren't quite so evil and blind but of course in dictatorships that tends to not be the case.
When one is designing theories, it can often be useful to keep in mind that they are theories.
For example:
> As is the standard playbook of dictator/authoritarian apologism, you completely reverse causality here...
You don't actually know the causality, because it cannot be known, it can only be predicted and believed. I think it may also not be possible to not do this, depending on the individual and their cultural/educational background.
> Stop committing mass murder, rape, genocide, child abduction, theft, purposeful destruction of civilian infrastructure, and war crimes in general.
You first lamow.
It's usually fairly easy and non-controversial to stay grounded when one is working with computer systems (or similar), but when working with large biological systems it can be much harder to remember, which is kind of counterintuitive considering the complexity of the systems is infinitely larger. I think if one is embedded within a system, that might be the differentiating psychological factor?
> it's that Russia and China are engaging in terrifying behavior, attacking and undermining their surrounding countries, promoting a pure might-makes-right and historical grievance narrative, making vast claims over neighboring countries sovereignty with their "spheres of influence" and China's ludicrous ocean claims, and on and on
You're giving an extremely dramatized version of what China has actually been doing.
> attacking and undermining their surrounding countries
China hasn't fought a foreign war in over 40 years. That's actually pretty incredible, when you think of the fact that most major powers have fought many wars in that same timespan.
> promoting a pure might-makes-right and historical grievance narrative
I have never seen China promote a "might-makes-right" narrative. China consistently states that the United Nations framework is the basis for international relations. That's why, for example, China has never recognized Russia's occupation of Crimea - it's contrary to the UN Charter.
> making vast claims over neighboring countries sovereignty
China's territorial claims haven't expanded in many decades - since its founding. In fact, the PRC has reduced its claims over time. It inherited a bunch of border disputes from the previous government (the ROC), some of which is has resolved through negotiation (for example, with Mongolia, Vietnam and the USSR/Russia).
If you look at the South China Sea dispute, for example, you might be surprised to learn that Taiwan (a.k.a., the ROC) has nearly identical territorial claims as the PRC. I say "nearly" identical, because the PRC has settled some aspects of the dispute with Vietnam through negotiation. Taiwan actually occupies the largest, most valuable island in the South China Sea.[0] The reason why China has been pouring cement on reefs is because it is a latecomer to the scramble for the South China Sea islands, and all the largest islands and reefs are already occupied by other countries, as you can see from this list: [1].
All of the countries bordering the South China Sea have extensive, overlapping claims. The US strategy is fairly successful because it comes in and offers to help various countries enforce their claims versus China. The downside for these countries is that they risk worsening their relationship with China, which is the most important economic partner for every country in the region, and that they might get dragged into a military conflict between the US and China. That's why countries in the region have gone back and forth between cozying up to the US and China.
Japan, South Korea, and Taiwan are 3 that make up a Pacific encirclement (probably the Philippines and perhaps Australia if you want to go that far). Typically that’s what people refer to when they say “surrounded” but obviously China isn’t completely surrounded. The reason these three are used in this context is because Chinese power projection assumes an outward eastern presence in the Pacific and not westward or northward.
Though ultimately this is of China’s own doing. They broke the “don’t interrupt your enemy while they are making a mistake” rule with respect to the US and very rapidly turned the tide against themselves and now find that they are the ones making the mistake and seemingly unaware.
The mistake being supporting Putin, taking over Hong Kong prematurely, and pissing off the Philippines and Japan for no good reason. This has caused Pacific national to rally around America and has caused an American-skeptic Europe to unite strongly under NATO and turn China-skeptic. The whole “wolf-warrior” diplomacy thing was a massive fuck up.
> and pissing off the Philippines and Japan for no good reason
And Vietnam, and India, and every country that borders the South China Sea. It’s like a kid who goes school and buys everyone gifts to make friends but still treats everyone like crap.
Yea you are correct. I’m not sure what was going through my head with leaving them out. May have been thinking about the “strong American Allies” aspect.
> The US is executing the same broad strategy against both China and Russia - surrounding them with US-friendly states who then get military support. It seems to be working extremely well against Russia since they can barely get Russian troops into the Donbass safely.
Following this then it would make sense for both China and Russia to feel threatened and react accordingly. I would expect the US to react even harder if any of their "enemies" would setup a missile base in Mexico or Canada.
> I would expect the US to react even harder if any of their "enemies" would setup a missile base in Mexico or Canada.
The U.S. and Russia both made security guarantees to remove nuclear missiles from Ukraine following the breakup of the USSR. The closest-to-Russia NATO member with forward-deployed US nuclear weapons is Turkey, and it's been a NATO member since 1952. https://www.newsweek.com/nato-us-nuclear-weapons-europe-site...
The cold war never got hot with US nuclear missile subs in Russian waters, and vice versa with Russian nuclear missile subs in US water.
NATO missile defences are present in the eastern block (Poland, Czech Republic, etc) and AFAIK those can be repurposed to launch offensive missiles as well. If having offensive missiles in a country takes 2 steps, where the first is gaining military access to said country and the second is to install offensive missiles, certainly the first step is the harder to accomplish.
Additionally, when it comes to geopolitical power things are much more complex than you make them to be. I suggest reading this publication[0] to understand better what's going on.
A few points:
> Moscow claims that missile defenses represent an American perception of threats from Russian nuclear missiles. Therefore these defenses aim to neutralize them in potential conflict. Either Russian missiles would be attacked by a conventional air and space first strike, possibly involving these networks in Europe, or else these missile defenses would frustrate a retaliatory second strike leaving Russia defenseless.
> While these missile defenses in and of themselves are no threat, they represent the first stage of a planned or potential U.S. buildup of a missile network in Europe that could then neutralize Russia's first and/or second strike capabilities as cited above and shift the burden of war to Europe.
> If missile defenses were stationed at these bases, it would create a pretext for stationing offensive missiles there. This would force Moscow to assume the worst case scenario and could cause Russia to attempt to shoot them down leading to a conflict with America.
> These defenses and whatever may follow them rupture the fabric of strategic stability where neither side has the freedom of action or margin of superiority that might encourage it to think it could employ coercive diplomacy or military force with impunity. That strategic stability equation is of critical importance to Russia because otherwise Washington might be tempted to think it could strike at Russia with relative impunity.
> Finally, there is a fifth, and always unstated but critical aspect here. These defenses entrench the United States in Europe's military defense and foreclose any prospect of Moscow's being able to intimidate or reestablish its hegemony over Eastern and Central Europe, and even possibly the CIS. If missile defenses exist in Europe, Russian missile threats are greatly diminished if not negated. Because empire and the creation of a fearsome domestic enemy are the justifications for and inextricable corollary of internal autocracy, the end of empire allegedly entails Russia's irrevocable decline as a great power and, (the crucial point) generates tremendous pressure for domestic reform.
> It's not stupid. It's bold and almost risk-free.
It's stupid and risky for either the US or China to escalate a war that threatens to become a global conflict between nuclear powers. I wish saner heads urging restraint would prevail.
So, China and Russia can just point on a map and say "I want that, and I have nukes, so, you know, WWIII".
If we are going to play this game, let's have it all out now, because that's no way to live. We all agreed a long time ago that this is not what nukes are for, and if someone wants to lay new rules, they should be ready for what's coming.
As opposed to what, just allowing the US to dominate you? Some people would rather destroy this planet than be subjugated by a foreign power. I don't blame them. At least they have the strength necessary to present such a credible threat. I wish my country did.
The US depends on China to a level where I'd say they own us, not the other way around. They play a large part in making almost every product we use in the US, without trade with them we're screwed.
Where China has an oversized impact is our trade deficit and consumer goods which makes them seem vastly more important than they are. However, that’s also the most flexible with south east asia replacing Chinese manufacturing as Chinese workers become more expensive.
Our trade deficit with China isn’t as bad as it seems because we export goods to countries China then imports from. Hong Kong for example is a 25.8B trade surplus and really should be included in Chinese trade numbers.
Long term China could be (already is being) replaced by countries like Vietnam and India as manufacturers. Possibly growing African countries like Nigeria as well. Chinese labor isn’t globally that cheap anymore but they do have the existing infrastructure
My pants were made in China, and now they are made in Mexico.
Mexico is optimally aligned, with a shared historical/cultural ethos, and desire for NA stability, too.
Also, it solves a problem; one cannot wage war without pants.
Well, unless you are General Buck Naked...
But my point is, manufacturing is returning to the West, which also has low cost production zones. And imagine, a revitalized Mexico, with the cartels broken, and a very strong middle class.
Globalization is sponsored by the US, and the US could reverse that. Without US defense of oil shipping routes, China sucks oil through a long, thin straw from an unreliable partner.
Bought fully into the Russian propaganda then… you’d do well to listen to pretty much any interview by Fiona Hill and you’d quickly realise there’s nothing the US wants less than borders starting to be changed by wars; there are so many disputed lines that it could lead to conflicts all over the world. China starting a proxy war with the US and Europe is going to be extremely bad for business.
> there’s nothing the US wants less than borders starting to be changed by wars
I think it's a major mistake to talk about any country as if it's one homogenous, unanimous entity. There are those in the US, and elsewhere, who stand to make a great deal of out of money from war.
>> there’s nothing the US wants less than borders starting to be changed by wars
> I think it's a major mistake to talk about any country as if it's one homogenous, unanimous entity
Not to mention mind reading! It's become so common and acceptable in our culture, we don't even realize when we're doing it anymore.
I swear, this simulation is becoming so bizarre it wouldn't even shock me if one day flood lights came on and we discovered we've been on a giant TV set this whole time.
On the brighter side though: what a show! How will it all end I wonder.
> Not sure about that, I stop reading as whenever I encounter such lazy writing!
Lazy writing is an assumption, and I don't think it is a remotely safe one.
Keep in mind that there is a difference between the state of mind a person is in at the time they were writing a comment, and the state of mind they are in when they get called on what they say in their comment.
Which part of the American government forced Putin to invade Ukraine? I presume you have some evidence of this because you sound so sure it was all planned?
1. NATO which is primarily funded by the US has been pushing up closer and closer against Russia’s border.
2. US helped orchestrate the 2014 coup that overthrew a democratically elected but Russian friendly government.
3. Ukraine, being a US client state, refused to uphold the Minsk peace agreements.
4. Immediately prior to the invasion the US/Ukraine side of the proxy war escalated shelling of Russian leaning parts of Ukraine crossing known red lines.
5. Ukraine has outlawed Russian language, culture, religion, political parties, and jail those who practice them. Which we all know is how democracies function /s
> US helped orchestrate the 2014 coup that overthrew a democratically elected but Russian friendly government.
Extreme corruption and mismanagement had a much larger influence on the ‘coup’. I’m not saying that the current gov is clean, but that’s what leads to regime change. Also the election you were referring to was a complete sham, which is common with most Russian supported governments
> Ukraine has outlawed Russian language, culture, religion, political parties, and jail those who practice them.
This happened after the 1st invasion, and not prior to that
However, the US government certainly signed off on pre-war decisions to extend Nato into Ukraine, paying to modernize the Ukrainian military, and Joint military exercises in the Black Sea.
Not being part of these decisions, You and I can only speculate on how they fit into overall US strategy and how the risk-rewards were weighed.
My concern as a US citizen is that the current war in Ukraine seems to be a great benefit for the USA in almost all regards. I am skeptical but would hope this was not a factor in the decisions leading up to the war.
> However, the US government certainly signed off on pre-war decisions to extend Nato into Ukraine, paying to modernize the Ukrainian military, and Joint military exercises in the Black Sea.
All of this occurred after 2014. What happened in 2014? Everything that is happening in that region is due to Putin and Russia’s own actions.
This is not a great benefit to the US whatsoever. It takes attention away from Asia. The US has been reaching in to its stockpiles and coffers to make sure Russia doesn’t get what it wants.
A revolution in Ukraine where a pro-Russia government was removed and a pro-NATO one came to power. This is extremely relevant.
>Everything that is happening in that region is due to Putin and Russia’s own actions.
To be clear, I am not denying Russia's agency and aggression. Similarly, I don't think it is realistic to say that the US has made zero decisions, has zero influence, has zero power, and zero interests in the region.
>This is not a great benefit to the US whatsoever.
This war has imposed real costs to Russia and has a real chance of destabilizing Russia for the foreseeable future, perhaps breaking it. It is extremally cheap compared to other wars and being fought without loss of American lives. The conflict is taking nothing away from US efforts in Asia.
Honest question: If you were a US military strategist, would you sacrifice Ukraine to destroy Russia? Would you sacrifice Ukraine to simply damage their military?
I’m think you’re confusing China with the US. Compared to the CCP, we don’t have border disputes like the melee death clashes in the mountains vs India, past border clashes with Russia, and the border spats with nearly every Asian country in the South China Sea
Maté, the self-declared non-expert on Russia or Ukraine[1], still spouting nonsense about Russia.
You'd be foolish to believe anything this mouthpiece of the Syrian government says.
Aaron Maté is a notorious war crimes and genocide denier. His takes on chemical weapons attacks by the Syrian regime (or Russia, for that matter) for example barely rise above the level of blatant, easily disprovable lies.
The same applies to Seymour Hersh. No matter what your opinions on the North Stream bombings and the perpetrator behind them are, his version of events is objectively false. Almost every detail mentioned in his article is very easy to disprove using just publicly available data. Only relying on a single anonymous source in order to make dubious claims has been a dominant motif in his work for at least a decade now.
Wouldn’t they be more likely to sell off the shelf components that Russia can use in their missiles? It’s not like Russia lacks an industry that specializes in weapons production.
The west will only shoot its own foot with such sanctions. World economy melted down after sanctioning Russia. Imagine sanctioning China, the country which the entire world depends on for the cheap consumer goods that keeps the engine of capitalism running.
It’s definitely the end of the US dollar as the global reserve currency, but you’re acting as if we had a choice when idiot dictators are committing shortsighted mayhem.
Decoupling will be painful, but not as painful to the US as it will be to China.
I think my impression of Xi as some kind of Machiavellian genius was shattered in his confrontation with Justin Trudeau. The idea that China or Xi are ready to try going it alone is fanciful. Western governments and rightwing media are perfectly capable of creating an anti-China narrative strong enough for nobody to be electable on a pro trade with China situation.
No one in the entire world has the necessary economic leverage to bring the US to its knees by applying economic sanctions to it. Even if they had such leverage, they wouldn't use it since the US will simply declare war and use its military might to end the sanctions. They've sent gunboats to other people's countries for far lesser offenses.
The EU also tends to look less kindly on military support for the expansion of the Russian empire than military support for European states' self defence. If you're having trouble processing why, a map of Europe may be handy...
There's no shortage of aspiration to have the empire though, which is why we're talking about a war in Ukraine and why Poland, the Baltics and Moldova take a much more favourable view of sending weapons to Ukraine than sending them to Russia...
The CCP has been concerned about capital flight, and been trying to prevent it, for a long time. It's true this has ramped up significantly under Xi, but that ramp up started at least 5 years ago as part of a general clamp down on private economic activities and personal travel. Basically Xi want more control over every aspect of Chinese domestic and international activity, on every axis.
Yes he's more assertive militarily as well, but I think that's just part of a 360 degree ramp up in assertiveness generally rather than with just one specific strategic goal in mind. In that sense even a takeover of Taiwan would be a means to an end, total party hegemony under Xi, rather than a goal in itself.
CCPs been stemming outflows for past decade, this is just another push, probably triggered by post covid flight from folks who want out and CCP being hooked on big drop in flight throughout covid. Capital flight was ~4T between 05s-15s when PRC economy was 1/3-2/3 as large. It's a good chunk of change to try to hold onto.
The CCP will not go to war in Taiwan anytime soon. Maybe ever. Younger Chinese are absolutely against it, the invasion of Ukraine has undermined everything China has ever said about invasion. To mount an invasion of Taiwan would be significantly more difficult than Ukraine, and is not feasible anytime soon. In short, China cannot afford it, monetarily and they cannot afford the potential blowback in trade and investment.
The only people who want to take back Taiwan are older Chinese government, and military hardliners. They are rapidly losing that battle as time goes on.
At least at the start of 2022 invasion Chinese internet propaganda and censorship machine was set to full russian bias. They even had official Chinese TV journalists embedded with ru forces documenting all the territorial gains. Last time I saw any mention of Chinese journalists was around July when one witnessed first hand a rather good T-72 entry into turret orbital tossing contest on theoretically secured back road around Mariupol. Up to that point all ru critical voices on Chinese internet were being actively muted, but that might have changed with Ukrainian August counter offensive. All in all its really hard to know what young Chinese people think, you can only know what government allows to publish at particular moment.
For all the disagreements here and possible flame wars from people on both sides, the very fact we’re allowed to discuss both sides of a conflict like this openly is a strength of our society and a weakness of theirs.
Well, then it’s too bad that younger Chinese have no power at all in a dictatorship. The problem with your argument is that you’re assuming that whoever is leading China right now is rational. You would be right before Xi, but Xi is neither patient or rational.
The end of the one China, two systems was totally unnecessary and reckless. I’m sure others can come up with more examples
A few months ago, there were widespread protests on the handling of covid in China. Since then, many covid restrictions have been eased and Hong Kong's mask policy was even recently lifted.
So protesting works, and Chinese people (young/old) do have power. (A fair amount of covid protests were held by university students btw)
They don’t have as much power as people who can vote. Also the COVID tracking apps have been very effective at neutralizing protests like the ones over provincial bank failures.
Let’s also not forget what happened to the student protesters at Tiananmen. All they have to do is get multiple army regiments from neighboring provinces, and they’ll have no qualms with massacring civilians.
Because as we all know, people outside your own province and state aren’t real people /s
All they have to do is declare martial law
Still, I hope you’re right and that I’m very wrong
Aside from these reasons, another signal is KMT officials meeting with China on the mainland recently. It seems china would prefer to do things politically
Of course politically is better -- "win without fighting". So a fifth column willing to hand over the island would be ideal. Men like certain officials of Kherson Oblast just last year, who complied with specific requests from the Kremlin.
It's my opinion there are generally 4 kinds of Chinese UHNWIs:
1. Mainland with no interest in foreign investment
2. Mainland mostly with some foreign investments
3. Split between mainland and foreign
4. Trying to move mostly foreign while keeping some in mainland (generally to take care of family or business concerns back home)
In the US as a more stable asset haven, hot real estate markets are usually where large piles of cash are parked by global investors, not just Chinese. The people in the 4th group often try to emigrate because individual property rights still aren't fully guaranteed in China. (Jack Ma is an example.) You would too if your neighbor had their assets seized or frozen arbitrarily.
I mean technically people can’t own land in China, they’re just leasing it from the government. This assumption has been baked into real estate prices but people bid it up anyways.
I think a core difference is that the law doesn’t stipulate that the land defaults back to the Crown after 100 years.
The difference is that in one system it’s symbolic and in the other system it has practical effects to manage ownership. I don’t think the Crown can decide, “I think we’ll just stop renewing the lease on this.”
That's... not how land in the UK works. Even the fraction of land which is owned by the Crown Estate and has tenants with fixed term contracts and obligations isn't administered by and doesn't send revenues to the King...
The fraction of land the Crown Estate owns, plus the land it gains when an estate is intestate. Plus the reversionary rights of the Crown Estate.
You are correct in what you said, but as I said, it works in China like it does in the UK (with of course some differences naturally). If you consider how the Crown Estate works in the UK, China works in a similar way.
Chinese land grants are limited in time. For instance residential leases last 70 years.[1] This means that the first leases granted after the communist revolution in 1949 are going to run out in 6 years.
We can conclude that people are bidding into the state's unwillingness to repossess real estate for the period they intend to hold themselves onto it. It's a sucker's game of hot potato where nobody is allowed to say just how fucking hot the potato is.
"Not fully guaranteed" is putting it mildly. There are no personal property rights in China. Or any other rights. Try crossing a CCP member, or worse a member of the military.
I wonder what the billionaires do to get their money out? Do they pay people to travel with jewellery that gets sold for foreign currency once it's outside China? Do they overpay for imported goods and get the difference paid into a Swiss bank account?
It's always interesting to me how really wealthy people pay for loopholes
They send their children overseas to overpriced universities, and are allowed to justify buying luxury cars, and other school related expenses. I don’t think the mentality on these expenses is getting a 1:1 conversion rate, but that money is meant to be spent.
There’s various ways they can fund their children’s business ventures (passion projects) overseas without expecting it to ever turn a profit.
With the nepotism in Asia, it doesn’t really matter what degree the children of the elite gets, but more school is always viewed as favorable, possibly even moreso than practical work experience sometimes. This is why you see a proliferation of masters and graduate programs in the United States that don’t require GRE or standardized exams. Obviously it’s a different story for the employment seeking middle class.
To your point, it’s not uncommon or a bad idea for the student to study the arts or art history degree either.
Buy crypto in China, sell it abroad. At least that was one approach. Note if you do it fairly quickly it doesn't matter what the value of the crypto is, just the liquidity.
Another way is 'business' investments in other SE Asian countries, that then get liquidated and moved further abroad. China does a lot of business with S. Korea for example. If you have an export company, and China exports a lot, you can hold a portion of the foreign earnings abroad and just keep them there.
I heard this many times and I can’t figure out how it works. Crypto is sortof banned in China for a while for this reason and yet it’s still a route to take money out of China. But how? Who is going to give you crypto for yen in China?
It's officially banned but it's not like they have been banned successfully. You just buy crypto by transfering money P2P to another individual and that individual sends you crypto back. The government has no way of knowing that a crypto transaction has happened.
Singapore, where the trade-to-GDP ratio is 320%. The best way to get money out of China is to ship goods to Singapore at a loss, then sell them on the Europe or the Middle East realizing the profits in Singapore
Look at the port of Singapore. Massive loading and unloading from ships, but no rail or lines of trucks leaving. Look at the hundreds of ships parked offshore waiting to load or unload. Look at the position on a map (every ship heading east from Asia passes Singapore, 2000 merchant ships per day)
Organized Crime in places like Vancouver smuggles drugs into Canada, the funds are laundered in casinos and real estate, and the money is transferred from the Wealthy in China to OC in China, and the wealthy investor gets clean cash and houses in Canada.
You don't need an official to authorize personal expenditures on an Amex Centurion black card. This is why staff at luxury clothing stores in Venice speak Chinese.
Not only that, look what they did to the Chinese stocks, not to mention their idiotic covid zero lockdowns. No investor can trust the government to not fuck up everything.
Seems like fairly easily dealt with by foreign big capital kind of money. They can just buy some commodity with their chinese cash, export it as a trade good, then import it in the country of choice and sell it and deposit it in their account. Sure you may lose 20% of profits in the process but that's probably ok if you're getting access to an untapped market.
A even better method is to start a business in China and get permission to send money overseas to buy “supplies”.
I was talking to guy in California who got an order for $1M in chips from a Chinese company. He had done tons of business in China and even had a factory there. Sent the invoice ahead of time (no product shipped) and the guy in China went silent.
His theory was that they used the invoice to get approval to exchange to USD and send it to the US. They probably edited the invoice to change the bank account the payment was made to.
That worked years ago, but nothing stops the Chinese government from clamping down on it.
They do not need foreign capital per se. They need foreign business expertise and technology in areas where domestic ones are not sufficient at the moment. For pure capital they have more than enough in US debt, maybe even too much, since they try to allocate as much of it as possible (e.g. using the one belt initiative) without launching RMB exchange rate into space.
With the mounting up US sanctions, trade wars, and "friend-shoring", China will have less and less interest in western investments.
True, but foreign business expertise and technology uses goes hand in hand with foreign investment (otherwise, why bother?). So China isn't going to get the former, if they don't make the later easier.
Ease of capital flow is one reason why Singapore has done so well (among many reasons). You can turn Singapore dollars into whatever currency you want, in whatever quantities and move it out of the country with no barriers at all.
Plus the rule of law, which means the government is predictable in its decision making. Singapore isn't going to turn around and nationalize a bunch of foreign industries any time soon, because they realize the second they do, all that foreign capital is going to disappear very quickly.
For example because your production capacity in China will produce your stuff for cheap and you will be able to sell this stuff with a good markup? You will not be able to easily sell the production capacity and move the resulting capital outside of China as you would in the US or EU, but as long as it operates it will generate you profit.
That could work in low capital intensive industries, but I'm not sure the numbers would work out for high tech, high capital intensive industries where you need to invest billions that you may never be able to recover.
China has run a persistent trade surplus with the US [1] so naturally it's accumulated a lot of USD, about $3T [2]. And there's only one place to keep that much money safely which is US Treasury i.e., lend it back to the US.
No. They bought it because the excess capital produced by artificially low exchange rate used to stimulate domestic production and exports is too big to be parked anywhere else.
With negative real interest rates they DO lose purchasing power and I think they thought about such risk. But making China a production powerhouse and technology transfer associated with it was a much more important goal.
Have been hearing these kind of "capital flight" stories for decade plus now somehow big financial institutions keep pushing more FDI into China.
See i'm not an economist but you can't that sounds a bit counter intuitive too me.
One story says China has capital flight and you have other stories talking about more and more Foreign directed investment into China.
It may sound counterintuitive but it actually makes perfect sense. China’s tight currency controls make it so the only way to gain access to its economy (which has obviously been growing phenomenally over the last 40 years) is to do direct investment, not portfolio investment like you would with a liberal currency.
Further, fdi is a small part of the economy. Something like 400 billion dollars a year if you believe the Chinese figures that are most optimistic.
So there can exist at the same time, foreign capital that wants to invest in the country and domestic capital that wants out. Even if it’s just the same proportion as the economy you’d see large capital flight.
The real question is what would happen if China liberalized its currency? Would that power investment more than it caused rapid flight? Who knows but every time the yuan opens a little trillions flows out of the country and the currency regime gets more conservative again.
Rich Chinese are getting their money out of the country, because if their money is in China, they don't really own it. The CCP could take it any day and there would be nothing they could do about it.
And then there is Western capital, used to rule of law and personal property. They don't see that reality as a realistic threat. So they keep pumping money into China. It will work. Until it doesn't. And then the CCP will simply take it.
But somehow I suspect that it will be a "too big to fail" situation, and all those losses will be socialized in the West, i.e. the Western governments pay for the losses probably.
>because if their money is in China, they don't really own it
The same can be said about money moved to the West, just with a different risk profile. As the Russian situation has shown, your property can be creatively taken away if your country of origin pisses off the US too much.
And yet we don't see capital flight from western countries to Russia and China. People with skin in the game are sending their money and kids to NATO countries.
> Regulations require that all state-owned enterprises and private companies operate party branches, and even some foreign-owned companies like Walmart have them. Internally, the organization can serve as a fertile networking ground. And for entrepreneurs, party membership often brings better relations with local government officials.
How about Arkady Volozh? He got sanctioned not because he has "direct ties to and props up Putin", but because Yandex operates in Russia and has to follow its rules.
Just look at the length of the list with sanctioned persons. Are you seriously saying that all of them have "direct ties to and prop up Putin"?
Yandex has started filtering out independent news about the war while he still was the CEO. He wouldn't have been sanctioned if he resigned when Yandex received that request.
2) Yandex was understandably cautious in the light of the new Russian laws, which effectively put a censorship net on coverage of the war.
3) Are you saying that Volozh should have followed the unspoken Western rules in operation of a business in Russia (read: he should've acted to please the West as much as he can, anticipating its demands) or risk loosing access to all his property in the West without any warning? And you think the Chinese will not see it as a potential risk?
I think it is pretty clear that once your money are out of China you'd have a choice if shit hits the fan: lose the money in the West and stay in 3rd world or another fascist state (that China will turn into if not there yet), or lose some money in China and relinquish control of involved companies, but be free in the West.
Well those are some dumbass rich Chinese people, after 2022 they expect what happened to Russians in the west won't happen to them when a Taiwan war starts?
Come on you can't really talk about Rule of law when its as fluid as the west wants it to be right? When it comes to Russia and China they can quickly find majority rule to change laws.
Nothing happened to "Russians in the West". There are literally millions of such, some quite wealthy, untouched.
Instead "very specific Russians" who had their wealth tied to the Russian state, were targetted.
This is a very important difference, completely followed a legal and standard procedures, was not arbitrary or decided upon by a dictator, or single person.
So no, "rich Chinese people" are not "dumbasses". And most are not "rich", but what the West would describe as "moderately wealthy".
China is seeing falling inbound FDI in all its major sectors, with financial services down 62% between 2019-2022 and electronics down 56%. Which would align with all of the major technology companies pulling out of China in 2022-2023
The article is talking about retail banking, which is different from investment into stocks and shares.
It's perfectly possible to have retail banking customers living abroad removing large amounts of capital from China, while at the same time foreign investors are injecting large amounts of capital into China. Two different flows.
I think the biggest impact is going to be places like Australia that benefit greatly from Chinese nationals abroad at the moment. There are lots of Chinese students and Chinese property owners in Australia. If they can't get access to their money, that's going to hurt Australia more than China.
Agree totally. Australian development companies (and some of them are part-owned or fully-owned by Chinese nationals) benefit from the property investment. And Aussie Universities are basically funded by Chinese students now (not that the quality has improved, just the staffing levels). But the average Aussie doesn't benefit.
Imho we should do what the Asian countries do: disallow buying property in Australia from non-Aussie citizens (or at least non-residents).
Capital flight will decrease (in the medium term, like by the end of the decade) as US Dollar dominance diminishes. Oil trades between China-Russia-India are now denominated in Rupee-Rubles or Renminbi-Rubles starting only this past year, and so the groundwork is already laid.
Maybe. But that’s not how it has worked in the past. In other cases capital controls like this cause international businesses to not trade in the currency and to instead demand other currencies to settle accounts, causing more capital flight.
There is an example in the article of an investor with money stuck in China. They won’t be doing as much investment as they would if the currency was liberal for instance.
The western currencies dominate foreign trade for lots of reasons, but the biggest by far is that they are easy to move.
Why would USD dominance diminish? Something like 90% of IP is based out of the US. Chinese education system is a complete joke (as evidence by brain drain).
EUR is all but finished. Chinese RMB is also set for significant depreciation as a direct result of international trade/manufacturing “rebalance” away from everything-made-in-China model. Only thing remaining is USD.
Because having a global reserve currency strongly relies on network effects and USD share in international trade is failing steadily?
How much of this IP heap is an utter trash like software patents and patents on black rectangles generated just to be added to a patent pool? From my (surface-level) understanding school-level education in the US has much bigger troubles compared to China, but luckily for the US it gets compensated (for now) by sucking brains from all over the world into the well established system of universities.
And it's not like China has no experience with playing extremely loosely with IP laws.
There has been some alarming articles about China's economy the past year, particularly that the real estate market, exports, and other issues are putting the company into a very terrible financial situation. However, the government in China IS the bank. They can declare a company solvent that is not, bailout anyone and everyone, shut down companies at will, etc.
In such a non-market economy, where the government controls everything, how does one measure the economy and its likelihood of implosion?
I've seen this idea expressed on HN a few times recently. I don't get it. The mechanics are really not that different from any other country. If you print billions to bail out entities you get rapid inflation. The big things at risk are real estate prices and local governments. You can't easily wave this away regardless of your level of control.
What would stop a country with full control from simply printing money and saying "inflation? What inflation?" Where will the cracks show and how will they show?
Think about what inflation is. Does the US make inflation real by acknowledging it? Or is it there even if we don't recognize it?
The cracks appear the same everywhere. You have large debts that need to be paid. You want to exchange cash for value. If you suddenly instantiate cash in large quantities to pay those debts, the ratio of cash:value suddenly gets a lot bigger. People start saying "hey, I was saving $10 bills in my wallet, and now everyone's passing around $1000 bills, what's up with that?" (hyperbolic and illustrative). Foreign entities taking your local currency start saying "hey, if you're gonna keep printing this stuff, I'm gonna need more of it to stay ahead of the curve and get 'my share'". Everyone needs to nudge up prices a little bit because they buy from others who raised prices, and that means labor prices need to rise. etc. etc.
When it is easier to get ahold of currency, the "value" of the currency goes down. If you're not producing increasingly more valuable stuff to offset that, it starts to mean prices rise.
Nation-state controls over capital inflows and outflows are not necessarily a bad idea, and were an alternative system proposed in the 1970s. Of course, the USA instead championed neoliberal trade policies that largely eliminated such controls, relying instead on petrodollar recycling to manage the balance-of-payments issues. It's worth taking a look at conditions in 1978 for context:
> "It is not just the capital outflow from the United States that has so hurt the dollar. Once, American capital outflow abroad was largely offSet by a surplus in trade. But the United States, has now slipped into a deficit in trade as well as payments, both because of its huge oil bills ($48 billion last year alone) and a weakening of exports, as other countries have grown more slowly and so have been importing less..."
> "Furthermore, capital flows are now even more important than trade flows. The meeting of OPEC in Saudi Arabia that starts Saturday, aimed at revaluing the oil‐producing countries’ dollar holdings, could have an even bigger impact on the dollar than the oil trade itself. Government holdings of the oil exporting countries total over $60 billion in monetary rerserves. Private holdings are unknown. Despite all the dollars that have flowed out, the United States is still trying to play the role of banker to the world, still providing the key currency for the world monetary system..."
The complexities of petrodollar recycling - weapons deals, aid programs, secretive Wall Street foreign investment funds, etc. - are generally not a subject of discussion in the western corporate media, but here's a good overview from 1985:
It's worth noting also that current USA-Russia tensions really began in 2003 when Putin largely rejected membership in the petrodollar recycling system, and similar issues arose with Venezuela and later, Libya.
Chinese oil imports are on the order of $175 billion per year, so they're apparently facing the same problem the US did in the 1970s. However, they're also building out renewable capacity faster than any other nation, which is the best way to escape fossil fuel dependency.
That was a big business until Xi decided to close that loophole. I am pretty sure there is some marginal mining operation in the dark in China. But the times of big miners and big flows moving out of China is over.
Meh. Clickbait. Their economy is just opening. They are facing same issues as India and USA. Worker shortages as many return back to their native villages and then have to return back to work or find a diff work. New workers must be retrained.
