China's Dreams of World Leadership are Fading

[frankfurter + 562]

8 hours ago, Ward Smith said:

Might I recommend a "quarantine" area for all new accounts? Other sites have that and it seems reasonable. Conversely, once someone moves up the participation chain, they should have better rights than Joe Newcomer. Just my 2 cents. I have noticed some tools are missing from the comments box when I post. I'm assuming the attacks from "Franks friends" are the reason? 

OK < deleted > the gloves are off.  

 

Edited February 13, 2020 by Tom Kirkman
moderator edit to delete name against another forum member

[0R0 + 6,251]

The picture Marcin has in his analysis is a straight lining of China's growth while the resources to obtain it have disappeared. 

His attitude towards the US is historically miscalculating motives and charging the US with the deaths inflicted by others in wars the US participated in and events the US had nothing to do with. He seems not to have graduated from reading Soviet era propaganda to modern skepticism. Despite participating here, he seems to be within an echochamber of European grievances. Not realizing that Europe as a whole (ex. UK) lost WWII, not just Germany. 

He is suffering  from a naive reading of China's economic advances and ignoring the fact that Xi and the hardliners that put him in power did so because they were unsure how they could continue to satisfy Chinese people's expectations for a steadily improving economy when their growth model had clearly stopped working. They are dreading the day they can't put together enough stimulus to make a convincing argument that their growth is above 0. 

We can see the drop in spending as % GDP from 2000 to 2010 as the boomers (bump at center of the population pyramid chart went from young families with Millennial children (bump at the bottom of the population pyramid below) at peak consumption, to 2010 when they were all at pre-retirement savings (retirement age 60 men 50 women 55 average so you start saving at age 35-40) at peak productivity age, they brought the current account surplus to 10% of GDP by 2010 and a savings glut. 

By 2010 all of the boomers are at least at the start of the savings stage of their life. And the Millennials start their entry into the workforce with rising expenditure as they age. From this point onwards the boomers continue saving while the Millennials start spending, so we see the weak rising trend of consumption to GDP from 2010 to now.

Till we reach 2020, where boomers are just entering retirement and Millennials are about to enter their savings stage of life. Needless to say, by 2025 half the boomers will have retired (above 55) and savings will have flattened, and by 2030 most of the boomers will be retired and savings will be negative. While the consumption are group of 25-40,or perhaps they will extend to 45, will be a much smaller % of the population. Note that the bottom of the pyramid is a bit narrower in reality than we see here because the number of births has been over-reported for a number of years by about 1-2 million/year . 

We can look at Japan of 2000 as a basis of comparison.to China today as its boomers were at their peak savings. And note that Japan's GDP growth flattened in 1990 when their boomer generation transitioned into their 40s and started saving ( a warning about the gross savings chart, it includes corporate savings, which have dropped). However, Japan did not start their huge stimulus packages yet. They were small, But China "learned" from Japan's experience and have put China through a decade of repeated credit and government stimulus packages averaging about 9% a year spending and 12% a year credit, So their GDP growth did not die instantly as had Japan's. They are trying to maintain growth, while its natural drivers are gone. 

 

We can see the Chinese savings preference rise with the large boomer generation reaching retirement savings age, then weaken with the smaller Millennials' spending wave, and about to weaken further as boomers retire. It should be  pointed out that the incomes have been artificially maintained by aggressive stimulus and credit expansion to replace the loss of net exports/current accounts and domestic incomes from consumption spending that boomers have reduced. 

Japan can be seen to have reduced savings to normalize at developed economy levels. But it should be noted that Japan had a very different external investment history than China. It eludes some of the stats, as they started in the 1990s to transform from producing exports to exporting factories. Meaning that they built factories, ran them through shakedown production runs, then took them apart, loaded them up on boats and rebuilt them at their target destinations starting with car factories in the US. Though Japan's direct outgoing investment numbers are impressive ($10 Trillion or 1.6X GDP), they are far bigger in reality as  the factory investments were listed as capital goods exports (and imports at their targets) and did not make it into the capital accounts. Yet these were obviously capital investments, and now capital assets distributed around the world, including China as well as the US, and Europe, India Malaysia and many other countries. Total estimated as 4X GDP Gross external , where official numbers are about 1.6X GDP at MITI and MOF (Ministry of Finance). 

This also distorts Japanese GDP and savings numbers, as nobody considered how to account for that kind of process appropriately. 

So the difference is that China maintained growth through credit stimulus and money printing. Mostly building infrastructure and housing. Doubling Debt to GDP in one decade. And failed to invest abroad as it blocked its companies and individuals via capital controls. Thus entrepreneurs have snuck out their funds and moved out of China, as I had amply documented elsewhere. The assets are not Chinese since those Chinese entrepreneurs are no longer associated with China and don't reside there nor do their families. This in addition to $650 B/yr in unrepatriated export revenue in 2015-6 

China's main external position are its reserves, which I presume are still largely posted as collateral for forwards contracts in commodities markets. 

Here we can see the savings glut of maturing China boomers causing a large bump in China's current accounts as they hit 10% of GDP, and fell to 0 as the Millennials entered their peak spending years, which are dropping off. We can see that bump pushing down the US current accounts as those exports translated into reserve (treasuries) accumulation, and rehypothecated via commodities contracts into leverage within the Eurodollar system that pushed into US assets. 

So at best we should expect China to see a flattening of GDP to just north of 1% growth if some stimulus is maintained and China avoids a credit meltdown, which I can't see them managing as consumption rates will fall as the Chinese Millennials go into savings mode, while boomers start tapping their retirement savings.  Sometime about 2025 the cash flows will reverse and there will be nobody to sell new debt to. 

But there are additional problems with the dollar account as in addition to the official dollar debt (below) There are some $1.5-2 Trillion of debt issued by offshore entities of Chinese companies. Which would not be a problem if China had a solid current accounts as it had before. But with sliding consumption AND savings and a large credit stimulus and a desperate private sector they cut off from shadow bank financing for two years sucking dollar credit abroad, it is a problem as they have an issue generating sufficient current account income. 

Edited February 13, 2020 by 0R0

[footeab@yahoo.com + 2,190]

1 hour ago, frankfurter said:

I suppose nobody in the USA has heard of the Monroe Doctrine, full spectrum dominance, or such? 

You just proved you do not know what the Monroe doctrine is or why.

[footeab@yahoo.com + 2,190]

45 minutes ago, 0R0 said:

The picture Marcin has in his analysis is a straight lining of China's growth while the resources to obtain it have disappeared. 

I have met several people from Poland.  None of them share Marcin's viewpoint.  I have met several people from China and most share Marcin's viewpoint.  < deleted >

Edited February 13, 2020 by Tom Kirkman
moderator edit to delete insinuations against another forum member

[0R0 + 6,251]

1 hour ago, footeab@yahoo.com said:

I have met several people from Poland.  None of them share Marcin's viewpoint.  I have met several people from China and most share Marcin's viewpoint. < deleted by moderator >

I have relatives in Poland, I don't communicate much since I never managed the language, but there was never the slightest interest in China. 

I think Marcin is indeed the kind of geopolitical analyst he claims to be, and his clients are looking for somebody to pat their backs to justify their deals with China won't land them in the hole, which they probably will, despite Marcin's proclamations that there is no hope but China, future masters of the planet. 

 

Edited February 13, 2020 by Tom Kirkman
moderator edit to delete insinuations against another forum member

[Rob Plant + 2,756]

1 hour ago, 0R0 said:

I think Marcin is indeed the kind of geopolitical analyst he claims to be

Exactly! Thank you ORO for seeing sense and presenting a cogent argument against Marcin's view!

Just because Marcin has different beliefs especially about his pet subject of China being the next hegemony that doesn't mean he is Chinese!!

He is a smart guy and clearly has done more research on this topic than most. He has stated many times that he would prefer the US to remain as the hegemony and yet he gets called out as this < deleted by moderator > and you wonder why he gets frustrated at some on this site.

Cmon guys ffs this is getting stupid now posting unsubstantiated claims about other posters just because you don't agree with them!

Present and back up your arguments as ORO has done!

Edited February 13, 2020 by Tom Kirkman
moderator edit to delete insinuations against another forum member

[Rob Plant + 2,756]

  12 hours ago, Ward Smith said:

Might I recommend a "quarantine" area for all new accounts? Other sites have that and it seems reasonable. Conversely, once someone moves up the participation chain, they should have better rights than Joe Newcomer. Just my 2 cents. I have noticed some tools are missing from the comments box when I post.  < deleted >

4 hours ago, frankfurter said:

Ok < deleted > the gloves are off.

Oh great here we go again!!!

This site sucks now quite frankly!

Its descending into abuse and calling people bots and/or Chinese infiltrators

It used to be about debate and learning from others who educate you on many subjects and appreciating a differing viewpoint. In the main that has gone now so I'm outta here certainly for a while.

 

/ Moderator edit  - agreed and fixed.  Enough already with the name calling and insinuations.

Edited February 13, 2020 by Tom Kirkman
moderator edit to delete name calling insinuations against another forum member

[Douglas Buckland + 6,308]

4 hours ago, frankfurter said:

Thank you for posting this.  Always good to see how one side views the other.  Fact; the report is written by Americans for Americans, so I am not surprised by the content. 

I suppose nobody in the USA has heard of the Monroe Doctrine, full spectrum dominance, or such? 

 

Here’s a novel idea, how about debating the issue, with documentation supporting your views, as opposed to simply discrediting the study? Your reply is NOT debating, it is simply expressing YOUR belief that the document is biased and invalid.

[frankfurter + 562]

18 minutes ago, Rob Plant said:

  12 hours ago, Ward Smith said:

Might I recommend a "quarantine" area for all new accounts? Other sites have that and it seems reasonable. Conversely, once someone moves up the participation chain, they should have better rights than Joe Newcomer. Just my 2 cents. I have noticed some tools are missing from the comments box when I post. < deleted >

Oh great here we go again!!!

This site sucks now quite frankly!

Its decending into abuse and calling people bots and/or Chinese infiltrators

It used to be about debate and learning from others who educate you on many subjects and appreciating a differing viewpoint. In the main that has gone now so I'm outta here certainly for a while.

Could not agree more.  Sign of our times? 

Edited February 13, 2020 by Tom Kirkman
moderator edit to delete insinuations against another forum member

[frankfurter + 562]

41 minutes ago, Douglas Buckland said:

Here’s a novel idea, how about debating the issue, with documentation supporting your views, as opposed to simply discrediting the study? Your reply is NOT debating, it is simply expressing YOUR belief that the document is biased and invalid.

Debate and discourse are tools for the dialectic. The report has little if anything to do with dialectic. The purpose of the report is to establish a position, not to arrive at a truth, but to arrive at a strategy to reach a goal: in this case, to dominate a deemed enemy. As such, little within the report is debatable. Like a stick in the sand, it's presence is not debatable: either you see the stick or you don't. What can be mooted, and should be, is the goal itself: ie why the stick is there at all and who placed it?

I repeat: thanks to Tom for posting this. For an outsider, it serves as a forewarning. 

[Tom Kirkman + 8,860]

15 hours ago, Ward Smith said:

Might I recommend a "quarantine" area for all new accounts? Other sites have that and it seems reasonable. Conversely, once someone moves up the participation chain, they should have better rights than Joe Newcomer. Just my 2 cents. I have noticed some tools are missing from the comments box when I post. I'm assuming the attacks from < name calling deleted by moderator >  are the reason? 

Everyone, I had previously warned about name calling against other forum members.  It was not an idle warning.

Please debate the issues instead of resorting to disparaging personal remarks.

Generally I prefer to edit out an inappropriate section as above, rather than deleting the entire comment, otherwise the thread gets chopped up and incomprehensible.  Movies in the cinema in Malaysia were censored, and the movies can get weird with chunks abruptly missing.

Private message me if you see anything inappropriate - I do NOT read every thread and every comment -  I am a VOLUNTEER moderator, and don't get paid for trying to keep things smooth here.

Nothing personal Ward, you just happen to have the first comment lately that I received a complaint about as a moderator.

 

[Tom Kirkman + 8,860]

3 hours ago, Rob Plant said:

Exactly! Thank you ORO for seeing sense and presenting a cogent argument against Marcin's view!

Just because Marcin has different beliefs especially about his pet subject of China being the next hegemony that doesn't mean he is Chinese!!

He is a smart guy and clearly has done more research on this topic than most. He has stated many times that he would prefer the US to remain as the hegemony and yet he gets called out as this "Chinese national claiming to be Polish using a VPN to get across China's firewall of censorship." and you wonder why he gets frustrated at some on this site.

Cmon guys ffs this is getting stupid now posting unsubstantiated claims about other posters just because you don't agree with them!

Present and back up your arguments as ORO has done!

Yes.  Enough about making disparaging remarks about other forum members, this is seriously getting out of hand.

Debate the issues without using disparaging remarks about others.  

Using disparaging remarks about someone you disagree with weakens your argument, it does not strengthen your position.

[Rasmus Jorgensen + 1,169]

On 2/12/2020 at 4:09 PM, BigJets said:

No idea.  I’m American, dumber than a box of rocks

Edited February 13, 2020 by Rasmus Jorgensen
Wrong time to try to be funny.

[Tom Kirkman + 8,860]

1 hour ago, Rasmus Jorgensen said:

Wrong time to try to be funny.

It was self-depreciating humor, in response to all the name calling and insinuations earlier.  I thought it was funny.  I've done it too.

https://www.urbandictionary.com/define.php?term=hurr%20durr

 

[Marcin2 + 725]

I would try to dissect, oilprice.com commenters reactions about my comment that proved to be so controversial, in chronology:

 

Ward Smith reaction:

 

earlier Frankfurter said: (a longer comment by F about Wagner article, comment mainly related to F opinion that Wagner article about BRI is biased. I cite the fragment of Frankfurter comment below) :

(…)

“The American century is closing [century, not the country]. We are now seeing the start of the Eurasian century.  The USA will do everything possible to stop this and try the age-old divide and conquer approach. That approach is a relic of the cold war, now useless, and will serve to drain the USA of capital and resources. If you think $2 trillion for tiny Afghanistan et al is much, what would you expect for an entire continent?”

(…)

  

earlier Marcin2 said (comment on Frankfurter comment, adding my opinion and real fears about the trend I observed ):

(…)

“4. US strategy is about keeping unilateral world order, with US preeminence, and preventing any country or region from achieving this status. We are not in kindergarten, you know numbers: US spent 15 trillion dollars on defence in 21st century to uppend this strategy, this is 50,000 dollars per each baby, woman and man in US. 100 million people died in 20th century in a battle about this preeminence, and remember that WW2 warfare were just children toys in comparison with what we have now at our disposal in global arsenals.

So it is unpatriotic, bordering treason to speak without bias about BRI in United States. So far all these has gone. It makes me really scary where this trend takes us all.”

(…)

 

 

 

Ward Smith said:

“HORSES*T. You want to lay 100 million deaths on the USA? What an as*. Was it the US who killed 30 million of their own people in the Soviet Union? Was it the US who killed 50 million of their own people in China? I think you're all done lecturing here, your wumaodang is showing. I do hope you're able to cash your check before the CCP utterly collapses. "

 

 

My rebuttal towards Ward Smith comment:

 

1. Basic knowledge of history, including WW2 history at high school level is assumed at this forum.  So we know that US was major ally country during WW2 and US effort was instrumental (in defence expenditures 1^st place, in raw war effort: people and gear: 2^nd place after Soviet Union) in defeating Nazi Japan and Nazi Germany.
2. a) US stated security strategy is preeminence (fact). b) US is the biggest global defence spender (fact, 40% of global spending), c) US raw conventional military power is superior to combined powers of countries on places 2^nd to 6^th (fact, we can toss about details) d) US actions and stated goals of US political leaders could give rise to valid opinion that US would defend preeminence with all the power at its disposal (opinion). e) warfare at our disposal, mainly nukes is much more devastating than WW2 military gear (fact).
3. The rest of the comment I find to be a deviation from the topic of the thread: deaths inflicted by 2 regimes to their own people: China and Russia were related to weak economic policies, it were deaths out of hunger, and  not from  the defence of preeminence of these 2 regimes (they never had preeminence, were poor developing countries when this deaths occurred).

  

I am still curious Ward about your  opinion:

I. Point 2 above,

II. Topic below:

 

Please ask yourself, if you are American how far are you gonna go to protect your hegemony ?

1- tariffs,

2- global sanctions for business with some entities

3- across the board high-technology embargo,

4- full economic conflict and global sanctions like with Iran

5- resources embargo, navy blockade,

6- shooting conventional war

7- nuclear war

We are now at 3,

4 is 30% possibility of armed conflict,

5 is 100% possibility of armed conflict. Please answer.

 

I really like the way 0R0 is disputing, and his comment ad. II was (an extract):

Start of quote “It is not the hegemony that is at stake. It is the independence - not just for US but everybody else. China's plan is about using everything in order to dominate and control the world so that the CCP can remain in power and obtain stature globally. Everybody else, and especially Americans, just want to make a buck. As you have seen, China manages to bribe away American's freedom of expression and access to information by pressuring Google and social media as well as censuring government officials and business leaders who poke the Panda. 

We most definitely want to see the CCP gone. Completely discredited and its statues pulled to the ground and its banners burnt. Its personnel shunned and abhorred and pushed to the sidelines of society, tried criminally piecemeal for what they had done. 

Step 4 is financial disconnection of China on a selective basis. If they don't disband their SOEs and SOE bank funding mechanisms and state led efforts in any industry. 

Nobody will shoot China, and there will be no blockade. After the horrible dysfunction of China on repeated bird flue in chickens, swine feever, green rot, it is on the verge of being unable to feed itself if not well past it. You don't need to resort to military actions under those circumstances, just trip up their food financing or their energy, or both.”  End of quote

So 0R0 would go to point 4 and definitely not point 5.

 

 

An important side note:

 I would be honest my major paranoid fear is about the way this transition is going to look, how hot it will be, would it lead to point 4 and 5 and later to points 6 & 7 ? We are at 3, just a reminder. I am more paranoid about the transition, than the future hegemony of China or Eurasia, although I would like the US hegemony to stay forever.

I am not a geostrategic analyst, just an armchair specialist, I obviously lack the professional foundation and time to engage more in it. Just a bizarre night hobby.

General comment, (not to Ward specifically) is:

Please do not shoot the messenger. It would be useful to treat me as a typical advocatus diaboli. In brainstorming difficult, not defined problems a person or even whole team is tasked to refute the arguments of the other side, it does have nothing to do with their personal opinions.

 

Chinese economic achievements (even with recent blunders) are very alluring for the economist, the beauty of Chinese entrepreneurship, stimulated by wise economic infrastructure enablers, I am aware that I write with passion about it. Political system is a major hindrance and danger to Chinese development, with recent Xi emperor for life being important step back. China could pay dearly for this political blunder.

[Tom Kirkman + 8,860]

2 minutes ago, Marcin2 said:

I would try to dissect, oilprice.com commenters reactions about my comment that proved to be so controversial, in chronology:

Nicely done rebuttal, Marcin.

[0R0 + 6,251]

1 hour ago, Marcin2 said:

 I would be honest my major paranoid fear is about the way this transition is going to look, how hot it will be, would it lead to point 4 and 5 and later to points 6 & 7 ? We are at 3, just a reminder. I am more paranoid about the transition, than the future hegemony of China or Eurasia, although I would like the US hegemony to stay forever.

You keep presuming that a hegemony of Eurasia is (1) doable at all, (2) doable by China, (3) worthwhile.

First, It isn't worthwhile. 

The necessary road rail and pipelines throughout central Asia and paralleled in Siberia, and the required industrial cities that need to be built there to make the entire project something more than just "fly over" wasteland (just that we go by rail  and road) is a $2 trillion  capital pit at the minimum that when complete would still not cost any less to use in Berlin to Wuhan commerce and travel than flying and ocean transport so long as a US centered naval coalition is there to maintain it (see Somali pirate problem and multiply by 100 as an echo of England vs. France or Spain imperial power struggle using piracy would do if there were no hegemon of the sea). 

China relying on this land route while the US and a coalition can maintain the sea lanes essentially means that China remains behind economically so long as it excludes itself from modern "free market" commerce such as it is practiced. 

Second, China can't do it because it can't afford to. 

As I pointed out, the structural tactics of the CCP to produce economic growth prevent it from ever being a high margin economy. Second, the control by the CCP makes necessary the internal espionage structure that enables the dissemination of any trade secret or R&D efforts such that the beneficiaries are not those who have invested in it, but those who copy it. 

Being a high margin economy requires that China dismantle the CCP and government control mechanisms entirely. Doing so would remove the BRI and the Eurasian project off the to do list. 

Again, as pointed out amply, China has a credit bubble economy that can not be sustained, and the longer the government props it up, the greater the damage down the road.  It can no longer rely on a world economy to take in further exports now that China is 20% of that world economy by volume. It has to convert to internal demand, meaning that same high margin economy that requires the CCP to fold. 

Finally, I don't believe it is doable at all, since the entire path of the transcontinental rail and road are lined with easy pinch points that can disable it at any point. The project, if ever completed, would be sabotaged so many times that it would be abandoned and crumble. 

As to China's fate under the CCP? it is far easier for the CCP to shutdown China's interconnections to the world than attempt to control the world in order to supply China's economy so it could grow on terms that don't endanger the CCP's hold on power. Do you really think that the CCP can hold on what people know of its dysfunction  when 10% of its people were traveling abroad each year?

 

 

[Dan Warnick + 6,100]

28 minutes ago, 0R0 said:

Second, the control by the CCP makes necessary the internal espionage structure that enables the dissemination of any trade secret or R&D efforts such that the beneficiaries are not those who have invested in it, but those who copy it

Exactly.  A short term money grab that teaches the grabbers NOT to trust those that empowered them to grab, while also teaching those that have been stolen from to NOT trust the thieves and their enablers.  You simply cannot develop long term trust and commerce-without-barriers if that is your model.

[Marcin2 + 725]

7 hours ago, 0R0 said:

You keep presuming that a hegemony of Eurasia is (1) doable at all, (2) doable by China, (3) worthwhile.

First, It isn't worthwhile. 

The necessary road rail and pipelines throughout central Asia and paralleled in Siberia, and the required industrial cities that need to be built there to make the entire project something more than just "fly over" wasteland (just that we go by rail  and road) is a $2 trillion  capital pit at the minimum that when complete would still not cost any less to use in Berlin to Wuhan commerce and travel than flying and ocean transport so long as a US centered naval coalition is there to maintain it (see Somali pirate problem and multiply by 100 as an echo of England vs. France or Spain imperial power struggle using piracy would do if there were no hegemon of the sea). 

China relying on this land route while the US and a coalition can maintain the sea lanes essentially means that China remains behind economically so long as it excludes itself from modern "free market" commerce such as it is practiced.

On Eurasian integration:

China-Central Asia - Russia/Europe land route is just a supplementary way to transport goods by rail and road. It is a middle solution by rail (12-18 days; potential to decrease to 5-7 days), between air freight (1-2 days) and sea freight (25-60 days). It will never have: volume of sea freight (100 million containers and 1 billion tons magnitude), or speed of air freight. This route is also used to import hydrocarbons from Central Asia and Russia. Central Asia and Russia is just 200 million people.

Most of Eurasian economic integration dominated by China goes: China-East Asian tigers (high tech supply chains), China-ASEAN (general trade, offshoring), China-Pakistan (direct access to Indian Ocean and Middle East). China-Europe is also important but it goes like US-Europe integration due to geographic distance.

To sum up the model of trade/transport would be most of all still through sea lanes, like today.

Actually most of this integration is already the fact.

Why Eurasian integration is an important aspect of future Chinese hegemony:

- China-East Asia (Japan, South Korea, Taiwan; 7.6 trillion GDP, 200 million people) high-tech trade and supply chains - currently most important for China. For all East Asian countries China is already the most important economic partner by big margin. Unfortunately for US actions of Trump administration 2018-2020 only tightened and streamlined development of these relations. China is the largest consumer of high tech components (by value: mainly integrated circuits). It is observed (reports by Pentagon and various American industry associations and think tanks) that each month more and more global companies cease to use American high-tech components, and try to substitute: mainly in East Asia but also Europe. All Chinese companies and international companies with Chinese based manufacturing base are in this trend. It is simply: a) expensive due to import/export tariffs b) very risky potential disruption to global supply chains - risk of further export and technological embargos to source any high-tech components in the American companies (from their US and global facilities alike). Of course substitution will take a few years as the United States is dominating some high-tech sectors, but substitution out of US components is a FACT. That is why it was Pentagon that recently VETOED further sanctions against Huawei.

- China - ASEAN (3.2 trillion GDP, 650 million people) is about general trade, physical integration, ASEAN gets access to vast Chinese market, Chinese gets access to cheap offshoring (like US offshoring to China in the past).

These 4 centers: China, ASEAN, East Asia and Central Asia/Russia is : 2,450 million people, 25 trillion dollars. This is very deep, very close part of integration, China being the most important economic partner by high margin.

Add to this: Australia, Bangladesh and Pakistan, also close but different another: 400 million people.

 

 

About Chinese banking system:

I do not have currently time to dissect and refute your arguments so please refer to:

https://bruegel.org/wp-content/uploads/2018/05/Presentation-by-Alicia-Garcia-Herrero.pdf

It has actually rebuttal to all your: Chinese finance system (and mainly bank system) will crash fears.

Edited February 14, 2020 by Marcin2
typo

[Marcin2 + 725]

 

As I pointed out, the structural tactics of the CCP to produce economic growth prevent it from ever being a high margin economy. Second, the control by the CCP makes necessary the internal espionage structure that enables the dissemination of any trade secret or R&D efforts such that the beneficiaries are not those who have invested in it, but those who copy it. 

Being a high margin economy requires that China dismantle the CCP and government control mechanisms entirely. Doing so would remove the BRI and the Eurasian project off the to do list. 

On R&D and modernization of industrial base:

- I am very glad that you express your opinions about China being unable to go up the value chain and build their own Intellectual Property.

But again hard FACTS on the ground are different:

- China goes up in all metrics of R&D, I was writing extensively about it here. Chinese companies, mainly private companies contribute 80% of R&D spending, China goes up in competition, technological etc. rankings every year.

Please give me some FACTS that back your opinion that China cannot innovate. In the different threads I created on this forum I proved by FACTS that China can innovate and does a lot of R&D. Why US conducts the most brutal tech assualt on Chinese tech companies since the end of the Cold WAr ? Because Chinese are so weak in R&D or Chinese are so strong in R&D and they are threat to US supremacy ?

 

- I do not know what is your definition of high-margin or low-margin economies. Please explain.

 

 

[Marcin2 + 725]

It is so sad for me that US is going down so fast. US does not understand that using only sanctions against Chinese companies as a way to compete with them is a very self damaging move. Look at a new yesterdays accusations: racketeering, stealing an IP from 6 US companies through employment of their former workers ? These are really desperate moves. The next 5 years will be very dangerous as US tools are mainly extorsion and military power. I hope this will not lead to war.

In the meantime nobody would want to economically co-operate with US companies as they present too much political risk.

 

[Rob Plant + 2,756]

37 minutes ago, Marcin2 said:

Please give me some FACTS that back your opinion that China cannot innovate. In the different threads I created on this forum I proved by FACTS that China can innovate and does a lot of R&D. Why US conducts the most brutal tech assualt on Chinese tech companies since the end of the Cold WAr ? Because Chinese are so weak in R&D or Chinese are so strong in R&D and they are threat to US supremacy ?

Is this actual innovation or R&D theft?

The whole political system is one of conformity to the rule of law of the CCP. This by definition doesn't breed innovation.

I think where they get their numbers from is outsourcing their R&D either by theft or paying huge salaries to outsiders to do their R&D for them. I believe you have touched on this previously.

http://uis.unesco.org/apps/visualisations/research-and-development-spending/

https://www.weforum.org/agenda/2018/12/how-much-countries-spend-on-r-d/

https://www.visualcapitalist.com/money-country-puts-r-d/

I agree with you that China want hegemony but I'm far from convinced it is within their grasp in the next 10 years as they have some huge issues to overcome, such as debt bubble, ageing population and the political regime. I think the regime needs to constantly change to appease the people, they will naturally gain more understanding of other countries freedoms the more that people travel and experience other cultures/political systems.

Personally I think whilst the CCP are in control of China the US will remain as hegemony. If China ever became a democracy then I'd worry.

[Rob Plant + 2,756]

7 minutes ago, Marcin2 said:

In the meantime nobody would want to economically co-operate with US companies as they present too much political risk.

Marcin how do you come up with this?

Lots of countries and global companies will want economic cooperation with the US, the risk is NOT to trade with them!

[Marcin2 + 725]

5 minutes ago, Rob Plant said:

Marcin how do you come up with this?

Lots of countries and global companies will want economic cooperation with the US, the risk is NOT to trade with them!

I have written about it today in answer to 0R0. This the real trend observed by Pentagon and US industry associations. Non Chinese companies co-operating with China = nearly all try to substitute US technology, they cannot loose Chinese clients - the biggest ones. That is why Pentagon block Huawei sanctions.

[Dan Warnick + 6,100]

40 minutes ago, Rob Plant said:

they will naturally gain more understanding of other countries freedoms the more that people travel and experience other cultures/political systems.

Personally I think whilst the CCP are in control of China the US will remain as hegemony. If China ever became a democracy then I'd worry.

The Chinese seem to be very good at learning consumerism.  Tour groups, and we have millions of Chinese tourists here annually, go about their day consuming and buying, but not really paying any attention to the culture to which they've flown into.  That will change when "touring" becomes somewhat more of the norm as opposed to being a novelty.

That second line of yours is one I'd agree with wholeheartedly.  Unleash them and they will rule the world.  Hold them back/down and they will follow, at least at the present time under the present system they find themselves in.

But all this is new to China and its citizens, all the way to the top.  They have come a tremendous way since opening to the world in 1978.  They have some incredibly intelligent people and innovators are everywhere.  The problem right now is that they know their limits and rarely push the boundaries for fear of a clamp down and return to the closed, brutal, society their parents and grandparents know so well.  IMHO.