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China's Peaceful Rise


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China again going out of its way to win friends and influence people…I’m not sure where the whole wolf warrior (lack of) diplomacy comes from but they continue to needlessly politically isolate themselves. This kind of shit just makes them look worse than the US to the global south, or at least the PI anyway.

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31 minutes ago, Josh said:

China again going out of its way to win friends and influence people…I’m not sure where the whole wolf warrior (lack of) diplomacy comes from but they continue to needlessly politically isolate themselves. This kind of shit just makes them look worse than the US to the global south, or at least the PI anyway.

Silly American! The Global South understands that the Filipinos are the servile lackeys of western imperialist judeo-nazi pigdogs that are violating the ancestral Chinese waters with their ships and their country. If they refuse to be liberated and join the great Asian co-prosperity sphere they will have to be decolonized and dewesternized by force, otherwise there will never be a truly multipolar world.

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China’s imports and exports decreased more than expected.

 

https://www.wsj.com/articles/chinese-exports-fall-at-steepest-pace-since-february-2020-e930246b

 

EDIT: non paywall article. Definitely worth watching the Chinese economy for the rest of the year; there are a number of compounding problems in the property market, local debt, foreign demand, and domestic consumer confidence that could be mutually reinforcing.

 

https://www.reuters.com/world/china/chinas-july-exports-imports-fall-much-faster-than-expected-2023-08-08/

Edited by Josh
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4 hours ago, urbanoid said:

Silly American! The Global South understands that the Filipinos are the servile lackeys of western imperialist judeo-nazi pigdogs that are violating the ancestral Chinese waters with their ships and their country. If they refuse to be liberated and join the great Asian co-prosperity sphere they will have to be decolonized and dewesternized by force, otherwise there will never be a truly multipolar world.

The IJA had officers that were too heavy handed and the Philippines was one place of excessive heavy handedness. Although that isn't the whole story. Of course the Asia Co-prosperity sphere was part of the process for the goal of securing the oil in Indonesia. So on that side, for example, civilian engineers and such were on their way to the Philippines, undoubtedly for infrastructure work. One ship with 1,000 of such kinds of civilians was sunk by a US sub in May 1942. One of the passengers was Yoichi Hatta. Hypothetically, had US forces not been able to return and that ship not sunk, I think the Jose P. Laurel government could have worked out well enough for the Philippines.

As for decolonization, the word "Indonesia" had not existed. The Indonesians saw an opportunity to end what was what... 200 or 300 years of being a colony of the Netherlands. So they collaborated with the Japanese, even by sending thousands of their laborors to the death railway construction in Thailand. The Japanese wanted secured oil, not and end goal to control what would become Indonesia. Many growing pains for Indonesia since they had not been shown how to adminster their own country by the Dutch. After Japan's defeat, a few thousand former IJA soldiers remained in the declared independent Indonesia to fight against the Dutch that wanted to reestablish control. For that, some of those Japanese war dead are buried at Indonesia's military Kalibata Heros Cemetary. 

Edited by futon
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WSJ reports of a possible US-Saudi deal re. normalizing relations with Israel.  Apparently a Saudi promise stopped being buddies with China will be included.  Even if it pans out, I see problems with enforcement of this "promise".

https://www.wsj.com/articles/u-s-saudi-arabia-agree-to-broad-terms-for-israel-normalization-ac6d549c

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Edited by Strannik
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In terms of yuan, China’s exports have been constant for the last three months — at ¥2 trillion. Exports are “down” only if you convert that to US dollars. But truth doesn’t get a lot of clicks, tabloid journalism does.

 

 

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Fair enough, good catch on exports to neighboring countries. The article I had read regarding falling exports had already noted that this didn't reflect a very large downturn in volume but rather in value, but I did assume that the total volume exported to the US was still dropping off in numerical terms. It seems it might simply be redirected.

The bigger problem seems to be deflation rather than a slump in the actual quantity of stuff exported:

https://www.nytimes.com/2023/08/09/business/china-economy-inflation.html

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I’m an American capitalist but also a realist, and since I spent 30 years in China, I know them a little bit.  So my question is:  What makes anyone think China can be made to “play by the rules”?  

CN now leads the world in trade and manufacturing, has a larger economy than the US on PPP basis, keeps its currency non-convertible (thus minimizing exposure to SWIFT financial coercion (and besides it’s our banker), and has at least two legs to go up on its path to further prosperity.

China now enjoys a substantial lead in cleantech, automation, R&D, new patents, new PhD theses, STEM grads, infrastructure and construction, port and other automation industrial robotics hypersonics and many other key technologies of the 4th Industrial Revolution, they’re competing and holding their own in both a trade war and a tech war with the US.

And as a nuclear power with a brand new national infrastructure and a large military force, they cannot be threatened or bullied.  They have always played a much longer game than anyone using Western thinking or military philosophy can understand.  I recently posted something about the virtues of learning from Sun Zi’s The Art of War, and the responses were provincial, to put it nicely.

As Dr. Kissinger has said, we are already in Cold War II.  So someone will have to explain to me, where in all of that objective reality does anyone see a China which has “to play by our rules”?  Fantasyland?

https://twitter.com/mitchpresnick/status/1689611189595033604?t=1pwtPxVTg9Udi_3NUpOH_w&s=19

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I’m an American capitalist but also a realist, and since I spent 30 years in China, I know them a little bit.  So my question is:  What makes anyone think China can be made to “play by the rules”?  

CN now leads the world in trade and manufacturing, has a larger economy than the US on PPP basis, keeps its currency non-convertible (thus minimizing exposure to SWIFT financial coercion (and besides it’s our banker), and has at least two legs to go up on its path to further prosperity.

China now enjoys a substantial lead in cleantech, automation, R&D, new patents, new PhD theses, STEM grads, infrastructure and construction, port and other automation industrial robotics hypersonics and many other key technologies of the 4th Industrial Revolution, they’re competing and holding their own in both a trade war and a tech war with the US.

And as a nuclear power with a brand new national infrastructure and a large military force, they cannot be threatened or bullied.  They have always played a much longer game than anyone using Western thinking or military philosophy can understand.  I recently posted something about the virtues of learning from Sun Zi’s The Art of War, and the responses were provincial, to put it nicely.

As Dr. Kissinger has said, we are already in Cold War II.  So someone will have to explain to me, where in all of that objective reality does anyone see a China which has “to play by our rules”?  Fantasyland?

https://twitter.com/mitchpresnick/status/1689611189595033604?t=1pwtPxVTg9Udi_3NUpOH_w&s=19

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1 hour ago, Strannik said:

I’m an American capitalist but also a realist, and since I spent 30 years in China, I know them a little bit.  So my question is:  What makes anyone think China can be made to “play by the rules”?  

CN now leads the world in trade and manufacturing, has a larger economy than the US on PPP basis, keeps its currency non-convertible (thus minimizing exposure to SWIFT financial coercion (and besides it’s our banker), and has at least two legs to go up on its path to further prosperity.

China now enjoys a substantial lead in cleantech, automation, R&D, new patents, new PhD theses, STEM grads, infrastructure and construction, port and other automation industrial robotics hypersonics and many other key technologies of the 4th Industrial Revolution, they’re competing and holding their own in both a trade war and a tech war with the US.

And as a nuclear power with a brand new national infrastructure and a large military force, they cannot be threatened or bullied.  They have always played a much longer game than anyone using Western thinking or military philosophy can understand.  I recently posted something about the virtues of learning from Sun Zi’s The Art of War, and the responses were provincial, to put it nicely.

As Dr. Kissinger has said, we are already in Cold War II.  So someone will have to explain to me, where in all of that objective reality does anyone see a China which has “to play by our rules”?  Fantasyland?

https://twitter.com/mitchpresnick/status/1689611189595033604?t=1pwtPxVTg9Udi_3NUpOH_w&s=19

They still rely on trade with The West (TM) and fear their exports to Europe and the US drying up - enough so that they haven't overtly supplied the Russians with weapons. So they are not truly independent of the existing economic system yet. Clearly China is allowed to get away with a lot of economic transgressions (in particular IP theft) because of its outsides economic influence, so to some extent it already doesn't "play by the rules".

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1 hour ago, Strannik said:

I’m an American capitalist but also a realist, and since I spent 30 years in China, I know them a little bit.  So my question is:  What makes anyone think China can be made to “play by the rules”?  

I have Chinese business contacts that I deal with constantly.  They are not interested in politics and on the occasional time that these matters are discussed, they do not seem to view Western governments as competent.  The focus is on trade and making money, they are not interested in anything from the West that is not related to those ends.

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6 hours ago, Josh said:

They still rely on trade with The West (TM) and fear their exports to Europe and the US drying up - enough so that they haven't overtly supplied the Russians with weapons. So they are not truly independent of the existing economic system yet. Clearly China is allowed to get away with a lot of economic transgressions (in particular IP theft) because of its outsides economic influence, so to some extent it already doesn't "play by the rules".

Nobody is totally "independent" -  even the mighty US, but more so EU - both did not dare to confiscate RU CB assets yet for example (although we might still see it)

The point is - the tables are turning: "the West" will not be unilaterally writing the "rules" anymore. 

Edited by Strannik
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13 hours ago, Strannik said:

Nobody is totally "independent" -  even the mighty US, but more so EU - both did not dare to confiscate RU CB assets yet for example (although we might still see it)

The point is - the tables are turning: "the West" will not be unilaterally writing the "rules" anymore. 

The tables might have turned - past tense. I think there’s a very good chance China’s economic growth slows to US levels in the immediate future. It’s definitely worth watching how Xi reacts to the economic difficulties through this year and next. Devalued property combined with local government and household debt is drying up all types of consumer demand right in the middle of China’s attempts to move more of its GDP from real estate and exports to consumer consumption. How the next year or two is navigated likely is crucial to the PRCs development.

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1 hour ago, Josh said:

 How the next year or two is navigated likely is crucial to the PRCs development.

No, it is not.  China will have a recession because recessions are a natural product of prolonged economic growth.  After that recession China will return to 6-9% growth rates.  

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2 hours ago, glenn239 said:

No, it is not.  China will have a recession because recessions are a natural product of prolonged economic growth.  After that recession China will return to 6-9% growth rates.  

And there in lies the question-does it? It seems to me there is a huge risk associated with the deflation/burst of China’s property bubble. The percentage of GDP tied to real estate is estimated to be 25-30%, larger than the US bubble of 2008. Moreover unlike the U.S., local Chinese municipalities rely on long term land leases for income. Also unlike the US, China has if anything over spent on infrastructure and will have a hard time simply using stimulus to smooth out the bumps in the road. Finally, even more than the US in 2008, consumers themselves are heavily invested in property, forming about half of all personal wealth. EDIT: We can add to this the vast amount of debt owed by Chinese local governments, as well as corporate debt and household debt .* /EDIT. At the same time, labor costs are skyrocketing and foreign investment is falling off a cliff.

 

It is possible that China returns to its high growth rates, especially given the top down government controls over industries and finance. But IMO it would take a master stroke of economic policy to do so or a fundamental change to how the CCP runs the country. Let’s put a pin in this and see where China is in a couple years.


* "Researchers at JPMorgan Chase calculated last month that overall debt within China — including households, companies and the government — had reached 282 percent of the country’s annual economic output."

https://www.nytimes.com/2023/07/08/business/china-debt-explained.html

Edited by Josh
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1 hour ago, Josh said:

And there in lies the question-does it? It seems to me there is a huge risk associated with the deflation/burst of China’s property bubble. The percentage of GDP tied to real estate is estimated to be 25-30%, larger than the US bubble of 2008. Moreover unlike the U.S., local Chinese municipalities rely on long term land leases for income. Also unlike the US, China has if anything over spent on infrastructure and will have a hard time simply using stimulus to smooth out the bumps in the road. Finally, even more than the US in 2008, consumers themselves are heavily invested in property, forming about half of all personal wealth. EDIT: We can add to this the vast amount of debt owed by Chinese local governments, as well as corporate debt and household debt .* /EDIT. At the same time, labor costs are skyrocketing and foreign investment is falling off a cliff.

 

It is possible that China returns to its high growth rates, especially given the top down government controls over industries and finance. But IMO it would take a master stroke of economic policy to do so or a fundamental change to how the CCP runs the country. Let’s put a pin in this and see where China is in a couple years.


* "Researchers at JPMorgan Chase calculated last month that overall debt within China — including households, companies and the government — had reached 282 percent of the country’s annual economic output."

https://www.nytimes.com/2023/07/08/business/china-debt-explained.html

And from where did they get data for calculation

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2 hours ago, Josh said:

And there in lies the question-does it? It seems to me there is a huge risk associated with the deflation/burst of China’s property bubble. The percentage of GDP tied to real estate is estimated to be 25-30%, larger than the US bubble of 2008.

I don't doubt that the Chinese property bubble will make a big pop when it goes, but in the long term China has successfully established the infrastructure, education, and culture of a world-leading mercantile nation.  

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21 minutes ago, Perun said:

And from where did they get data for calculation

I suspect they extrapolated in some fashion, though it does raise the issue that even for the relatively bad economic news coming out of the PRC now, we are trusting official sources which have a history of inaccuracies or of simply being withheld. One of the articles I just read mentioned that consumer spending numbers simply stopped being published earlier in the year.

Edited by Josh
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8 minutes ago, glenn239 said:

I don't doubt that the Chinese property bubble will make a big pop when it goes, but in the long term China has successfully established the infrastructure, education, and culture of a world-leading mercantile nation.  

And I don't doubt that either, but I think the conditions that allowed for their expansive growth are no longer valid. The "long covid" economy they are entering I think is an inflection point the same way the real estate bubble burst in Japan was for their Lost Decade(s). Which isn't to say China suffers the same stagnation as Japan (though I think there is a risk, depending on how deflation plays out), but I think 5-6% GDP growth is right out. No matter how successfully they navigate their situation, I don't see the underlying conditions that fed that amount of growth still in effect. We'll see in the coming years how it goes.

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4 minutes ago, Josh said:

 One of the articles I just read mentioned that consumer spending numbers simply stopped being published earlier in the year.

From what I understand, the Chinese do not spend like Americans.  This has advantages and disadvantages compared to the American (and Canadian) custom of leveraged debt up to the tits being the norm these days. 

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Just now, glenn239 said:

From what I understand, the Chinese do not spend like Americans.  This has advantages and disadvantages compared to the American (and Canadian) custom of leveraged debt up to the tits being the norm these days. 

No doubt, but the fact that numbers are simply being withheld doesn't inspire confidence. As responsible as saving is on the individual level, on the macro level it is very much the opposite of the desired behavior right at this juncture.

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