Can you give any more details on "China's economy is crashing"? I must admit I haven't heard anything negative about their economy, thought it was on the up and up.
It's not all sovereign debt. The amount of debt owed by Chinese companies has also been exploding over the last few years. It's possible they're taking out all that debt to make productive investments, but the analyses I've seen suggest that there's way too much debt for that to be the case.
Now maybe the argument is that in a crisis this would all become sovereign debt (i.e. the government would bail the companies out and assume their debts). But that has its own issues, including the need for higher taxation to service the debt.
That's not how government debt works. There is no ceiling on the amount of debt you can have except in extreme cases like 2-3x debt to GDP ratio which China is nowhere near. Government debt is really just a record keeping system for funding and not really debt like you and me have. Look up US debt and how it works to fund the economy.
Velocity is important. China went from no debt to 2X in less than a decade. If they are 3X a few years from now, how will that work. They have to deleverage somehow, or at least stop the growth.
From the PRC's perspective, the yuan is a just a tool to stimulate productive activity in their population towards the goals expressed in state budgets. If they can muster the political will, they can simply levy highly progressive taxes to reduce inflation and keep on spending. There is nothing stopping them, ideologically.
If growth is mostly currently debt fueled, that growth can easily stop and reverse when the debt is pulled back. Recession at best, depression at worst, definitely there will be a few crashes along the way.
Do you think real estate can really be sustained at it's current levels? Much of it has been bought as a speculative asset (no property taxes makes that easy) with the idea that it can only keep going up because of urbanization. However, farmers are generally poor not rich, it is not clear where the "bigger idiots" are going to come from.
China's tax burden is already high for those that pay them. Going after those that don't at the high end is difficult because they tend to be officials or highly connected to officials in the first place.
The purpose of the growth, from a governance perspective, is to keep the population satisfied through a rising standard of living, and to continue to develop the country through sane budget allocations. They can continue to do that using debt, because the only risk from doing so is inflation, which they can keep low with taxes on the present debt holders.
The housing market may crash: I was talking about the claim that economy in general crashing. But I think the PRC might see a housing market crash as desirable, as it would raise the standard of living for most citizens. They certainly seem bent on slowing it down. https://www.reuters.com/article/us-china-economy-property-in...
China does have economic problems, but they are more problems of political will, not intractable from a strictly economic perspective. The solution involves the country's elite taking a haircut.
It is difficult to see a case where housing crashes and the economy in general doesn't. They see a housing crash as desirable, for sure, but too much economic activity right now is tied up in real estate and infrastructure investment, they know how painful it will be. So they keep pumping up housing....
If you understand the population distribution in the PRC, have spent time in a Tier 2 or Tier 3 city, and think deeply about economic growth, the idea that the Chinese economy could "crash" is laughable: there is a vast pool of emerging customers that will continue to fuel growth over the foreseeable future. The question is whether global trends, especially related to climate change driven instability, will interfere in the emergence of the socialist/communist market economy. If you find a contradiction in the conception of a socialist/communist market economy, check Dominic Losurdo's
"Has China Turned to Capitalism?—Reflections on the
Transition from Capitalism to Socialism" published in the March 2017 issue of International Critical Thought.
Although a Socialist (using this in the sense of lower-stage Communist, rather than as Marx used it as synonymous with Communism) market economy can be practicable, China does not have it - most notably because there is wage labour and private property is protected by the State. The State is also not in democratic control of the workers. These rule out China from being either a Socialist country or having a Socialist (market or not) economy.
China's fast descent into totalitarianism is fascinating and scary. One can easily replace 'bitcoin executives' with 'foreign executives' or 'foreign assets' and see where this is going. I wonder if those companies that choose to outsource all the jobs in their country to China realized what they've done.
I think people tend to gloss over the fact that China has a population of more than 1.4 billion people in a land area that's slightly smaller than the US, multiple territories in outright revolt, ongoing territorial conflict, some cities that are approaching inhospitability due to environmental damage, and our increasingly aggressive nation is something less than friendly with them.
I think one thing causing the apparent increase in political discontent in the US is the increasing metaphorical distance between congress and the people. Now imagine if you increased our population by more than 400%, had Hawaii declaring independence, and various states trying to separate either to go completely independent or join Mexico or Canada. And now of imagine that a coalition of China, Russia, Iran and other unfriendly nations were constantly posturing towards an invasion of Mexico which would put them right at our doorstep while their motherland remains far out of reach.
I'm in no way defending China, but I think it's safe to say that the level of authoritarianism we would respond with if we hit even a fraction of the issues they're facing would be unlike anything the world has ever seen. Our current political systems and technologies, regardless of specific political ideology, do not scale well.
That said there is one macabre issue that benefits China. About 50 years ago Chinese were starving to death by the tens of millions. While perhaps controversial, I think contentedness paradoxically breeds discontent. Consider in the US that much of the political discontent is heavily centered at some of the most privileged areas in the nation. We can wax poetic about justice and the nuance of social interaction. People struggling to just get by have more immediate issues to deal with. China's successful industrialization of their nation is already producing an increasingly large contented class to whom the struggles China has had are as personally familiar to them as the lynchings or Cold War of US history are to us. That newfounded contented class is likely to spark discontent towards the very actions that provided their luxury - and China will have to manage that somehow.
>had Hawaii declaring independence, and various states trying to separate either to go completely independent or join Mexico or Canada. And now of imagine that a coalition of China, Russia, Iran and other unfriendly nations were constantly posturing towards an invasion of Mexico
Can you map these metaphors to their counterparts in China?
I believe it’s the western states which are in rebellion, which have significant Muslim populations. North Korea is being threatened with invasion and China is encircled by US allies and military bases.
I wouldn't call the situation in Xinjiang or Tibet a rebellion. There are independence movements of some importance, but AFAIK the majority population in both regions are Han Chinese by now, who have much less reason for separatism.
A comparable situation for the US might be native Hawaiians campaigning for independence, while the majority population just doesn't care. There are probably such groups already, they just haven't resorted to violence enough/encountered a strong enough reaction by the state to become notorious.
You are really overestimating the substance of the native Hawaiian independence movement. The vast vast majority of people living in Hawaii are not even native Hawaiian to begin with. And even most local Hawaiians don't want independence from the United States. It is really a tiny minority offshoot with some specific political grievances. Independence isn't even seriously floated by the majority of these independence folks. The whole idea is just a political and marketing tool except to a very small group of people.
I'm telling you right now... Let there be no illusion that Hawaii would or could ever declare independence from the mainland. Hawaiians wanting independence are a tiny minority, and even they realize that the residents of Hawaii have basically a three-way choice: The United States, Russia, or China. Hawaii is far too liberal and American and really everyone underestimates how much American military force is there on those islands. It ain't going anywhere without a fight that almost no one else can win.
There was some democracy in the late 1800s to early 1900s. But it didn't gel with the Confucian ethos. Stephenson's Diamond Age is actually pretty informative.
The first was a last ditch effort by the Qing dynasty to retain power with the election of powerless feel-good provincial assemblies. Even if they had real authority, which they did not, only half a percent of the populace had franchise. Not a democracy by any means.
The 1912 election was for the Nationalists upon overthrowing the imperial system. However China transitioned into a period of warlord rule immediately and the National Assembly never had any control over anything except in theory on paper until Taiwan transitioned to democracy in the 80’s and 90’s.
I think by outsourcing to China or entering the Chinese market, those companies are making a conscious decision to accept the risk, which is that what is perfectly legal and fine today can suddenly be illegal and hated tomorrow. Also, you can't expect any fair fight in China. Quanxi and lobbying the established politicians and tycoons is just part of any business.
If you mix up monarchy, empire, dictatorship, etc. all in the same bucket and call everything 'totalitarian', our ability to think about politics gets rather reduced.
I mean, I guess they could have crushed him later. But you can watch the video - he wasn't crushed after standing in front of the tank in the iconic photo.
That assumption doesn't seem to be very well supported by the comment you are responding to - what makes you think they don't know what happened in Tiananmen?
It's a lot less charitable than "OP was probably referring to the fact that video evidence shows tank guy being pulled away out of sight before the tanks continued past the point where he had been standing, rather than showing the tanks just rolling over him as that comment kind of implied". If you're going to be very careful to correct people who assert that the guy wasn't crushed, you need to jump on people who say he was crushed too, or you look like you're using the argument as an excuse to attack someone rather than being deeply invested in correctness.
um, where have you been the past 2 years? China's stock market crashed, its forex reserve down 1 trillion, its millionnaires fleeing the country, it has imposed massive (but ineffective) capital control to prevent any money from leaving, its gdp/debt ratio way above 300%, its economy propped up by shadow debts.
