China

[admin]

Just watched an interesting lecture by Kai Fu Lee on Chinese innovation and Artificiial Intelligence.
Very interesting talk about the future.

[moneymaker]

Very interesting. Makes me hope we can form a cooperative relationship with China rather than an adversarial one. Like the part about correlating phone battery status to likelihood of default on loan.

[The-Shoveler]

LOL Make sure all your parameters meet the AI’s approval parameters.

I do think it will not be too long before all these trade issues etc.. will get resolved between US and China and both will benefit greatly.

[ocrenter]

[quote=moneymaker]Very interesting. Makes me hope we can form a cooperative relationship with China rather than an adversarial one. Like the part about correlating phone battery status to likelihood of default on loan.[/quote]

How would you propose a cooperative relationship with the world’s biggest Nazi regime?

[Myriad]

[quote=ocrenter]How would you propose a cooperative relationship with the world’s biggest Nazi regime?[/quote]

It’s incorrect to equate China with the Nazi’s. They don’t want to get rid of other types of people, just subjugate them. The government really are just completely scared of Muslims and terrorism, but only second to internal protests.
What China is really trying to do is create a sphere of influence and a tribute system for countries to pay them. As opposed to Nazi’s trying to take over Europe.

[Myriad]

.

[Myriad]

It would be nice to have a cooperative relationship with China. Unfortunately, that’s not happening right now.
There’s lots wrong with what both countries do internationally. China’s OBOR policy is really just a back door way to subjugate Asia. You could argue that the US has done some of the same things in the past, but the US has vastly more internal policy discord. China is able to align it’s financial, military, diplomatic, commercial, and other sectors and wield it as a single foreign policy tool.

The media in Hong Kong has been talking about Cold War for months. Finally the WSJ picks up the theme also.
https://www.wsj.com/articles/u-s-edges-toward-new-cold-war-era-with-china-1539355839?mod=hp_lead_pos9

Also, watch the policy speech by VP Pence at the Hudson Institute. The US is doing much more than a trade war with China.

There’s an interesting discussion of naval policy with direct relation of Mahan vs Mackinder

Heartland Theory
https://en.wikipedia.org/wiki/The_Geographical_Pivot_of_History

[ocrenter]

[quote=Myriad][quote=ocrenter]How would you propose a cooperative relationship with the world’s biggest Nazi regime?[/quote]

It’s incorrect to equate China with the Nazi’s. They don’t want to get rid of other types of people, just subjugate them. The government really are just completely scared of Muslims and terrorism, but only second to internal protests.
What China is really trying to do is create a sphere of influence and a tribute system for countries to pay them. As opposed to Nazi’s trying to take over Europe.[/quote]

Key aspect of nazism is the concept of racial hierarchy and the presence of a master race. Another important idea is socialism reshaped by extreme nationalism.

China ascribes to Han Chinese as the master race on top of all racial hierarchy. This is ingrained in the teaching of all Chinese children in school. They are doing everything they can to reach that goal in progressive steps. As for getting rid of people, they want to get rid of other cultures. Chinese have known the power of assimilation is far more effective in the long term than ethnic cleansing. Why do you think so many people think they are pure “Han Chinese” around the world? The plan is to annex Taiwan, the only sinospheric area outside of Chinese control. Once China can control the entire linguistic and cultural sphere (btw, no other country in the world have total control of a linguist and cultural sphere in the world, the ability to control speech and thought would be unprecedented), then onwards to all of the East Asian countries, which China sees as easy target for full assimilation. They also figure SE Asia would be easy prey given these brown countries are already dominated economically by Han Chinese. With full and total control of East and SE Asia, full domination of the world order would be a given.

[FlyerInHi]

[quote=Myriad]
There’s lots wrong with what both countries do internationally. China’s OBOR policy is really just a back door way to subjugate Asia. You could argue that the US has done some of the same things in the past, but the US has vastly more internal policy discord. China is able to align it’s financial, military, diplomatic, commercial, and other sectors and wield it as a single foreign policy tool.
[/quote]

Does that mean we are admitting that government economic planning works?
Kai Fu Lee said in his talk that, in the past 5 years, China’s risk aversion culture is gone thanks to government program.

Why is planning working for China but didn’t work for the Soviet Union? Or didn’t work so well in France?

I see a lot of worry about China, but… in the USA, our bedrock popular belief is that government planning always fails catastrophically. So should we not relax and just let China fail?

Actually I have an answer to that…. China learned best practices from us and they implemented them masterfully. We make the mistake of thinging of capitalism (private ownership) vs socialism (state ownership). But China has learned to use capital (money, money creation and management) to achieve development goals. It was the Ford Foundation that, at first, bought Chinese students to learn from us. They returned to China after Mao died and developed the policies that led to today’s prosperity.

http://www.chinadevelopmentbrief.cn/articles/our-registration-story-the-ford-foundation/

The Ford Foundation began its work related to China in the United States in the 1960s and 1970s by funding the establishment of centers of Chinese Studies at major American universities, including Harvard, Berkeley and the University of Michigan. Because of this early investment, at the time of the normalization of China-US relations the Ford Foundation was in a strong position to begin supporting work directly in the PRC. In 1988 we opened an office in China in partnership with CASS.

[FlyerInHi]

[quote=Myriad][quote=ocrenter]How would you propose a cooperative relationship with the world’s biggest Nazi regime?[/quote]

It’s incorrect to equate China with the Nazi’s. They don’t want to get rid of other types of people, just subjugate them. The government really are just completely scared of Muslims and terrorism, but only second to internal protests.
What China is really trying to do is create a sphere of influence and a tribute system for countries to pay them. As opposed to Nazi’s trying to take over Europe.[/quote]

That sounds out of the past, and not possible in a post colonial world. Zbigniew Brzezinski wrote about that. That’s why wars such as Vietnam, Afghanistan, Iraq fail. We failed in those countries and China is moving in with development and commerce.

I see China as focused on commerce and money and nothing breeds admiration like brand new shopping malls, tall buildings and urban high tech such as metros and trains. China is developing soft power very fast and people in Africa, SE Asia and even Latin America are aspiring to be like China.

The US is actually trying to create a tribute regime whereby the rest of the world pays us tribute for IP. But the humanist reason for IP is to spur innovation. IP is not to stop copying of an original idea through a royalty regime, but to provide some protection so more innovation can happen. But if innovation is hampered, or ideas are not put to use to improve lives, then the concept of IP falls apart.

I don’t think we can just blame China. After all, China is providing development and improving living standards. If we don’t want the world to follow China, we need to up our game and woo the world with US led development.

Did you read the Washington Post story about the effect of withdrawal from TPP on Vietnam? Meanwhile the Hanoi metro, built by China, is in final test phase and set to open by lunar new year. Bravo to USA and China!

[Myriad]

[quote=FlyerInHi] That sounds out of the past, and not possible in a post colonial world. Zbigniew Brzezinski wrote about that. That’s why wars such as Vietnam, Afghanistan, Iraq fail. We failed in those countries and China is moving in with development and commerce.

I don’t think we can just blame China. After all, China is providing development and improving living standards. If we don’t want the world to follow China, we need to up our game and woo the world with US led development.

Did you read the Washington Post story about the effect of withdrawal from TPP on Vietnam? Meanwhile the Hanoi metro, built by China, is in final test phase and set to open by lunar new year. Bravo to USA and China![/quote]

Oh, the US does plenty of stupid stuff too. The US does things in it’s own interest too – just different. Usually it’s for a few investors to get more rich as opposed to creating spheres of influence. What China is doing recently will force Asia into a pro-China sphere vs a pro-Western sphere.

And all the projects China is building – it’s really to buy favor with the leaders of those countries, not to help the local citizens. If they really wanted to help the local economy, they would hire local workers and not load them up with debt that the countries won’t be able to repay without losing their sovereignty.

Here’s an article comparing the Japan built HCMC metro vs the China built Hanoi metro. Time will tell I guess.
https://www.scmp.com/week-asia/business/article/2104149/vietnams-tale-two-metros-one-built-japanese-and-other-chinese

Every time I hear of unrealistic and expensive rail projects (Chinese’s ones, CA HSR, etc), I always think of the Simpson’s monorail episode.

[FlyerInHi]

Myriad, I agree that the quality perception of China quality s lacking. But that is psychological more than real. After all, a physical good is just an object regardless where it’s made.

In terms of soft power, I would say that 80% of the world used to be on our side. It’s getting closer to 50% between USA and China, especially among the population just coming out of poverty. Chinese businessmen are very good. Small Chinese businessmen open shops in the developing world and provide credit to local people.

In 20 years we will be able to tell what policies worked best. I think the development projects will pay for China — it’s a way for them to export high value goods and services. I look forward to traveling in Asia enjoying the infrastructure being built.

Macro wise, the Western liberal order in under threat with nationalism and possibly the implosion of Europe. I believe, in an interconnected world, capitalism and commerce are now trumping military and political forces. But we will see in 20 years. It’s not that long to wait.

The latest trade numbers are in. The trade deficit with China is widening as is the total trade deficit. Will Trump be able to bring manufacturing back to USA?
https://lasvegassun.com/news/2018/oct/12/china-trade-surplus-with-us-widens-to-record-341b/

And meanwhile BMW is investing more in China because ownership rules have been relaxed. I hope our companies don’t lose out in the biggest market. And I hope China doesn’t overtake us in our own backyard, Latin America. Australia and New Zealand are now firmly in the China economic sphere even though they are on our side politically.
https://www.bbc.com/news/business-45819620

[ocrenter]

Chinese real estate bubble bursting as we speak.

Builders offering condos at 50% reduction in inland provinces (Jiangxi)

In Xiamen, builder discount of 40% led to violent protests on the street by current owners. (Bought at $720k, now valued at $430k).

In Shanghai, builder discount by 20%.

Most builders living off credit, with credit drying up, there goes the fire sales. Things will be a lot worse then our prior bubble burst. Chinese real estate valuation is 5 times the size of their GDP. The Japanese bubble burst in the early 90’s had a valuation to GDP ratio of 2:1. The US 2008 bubble burst had a valuation to GDP ratio of 1.7:1. Not only that but building quality universally is atrocious, that’s going to make recovery efforts that much more difficult.

This coming right off the heel of bursting of the P2P lending bubble.

And suddenly our real estate market grinds to a halt. The Chinese led bubble burst has begun.

[Rich Toscano]

Hi ocr – Where did you find that data on real estate to GDP ratio? That was a really interesting stat so I went looking for more info, and found this from PIMCO:

“We estimate China’s property market to be worth around US$22 trillion, approximately 1.8 times the size of its GDP in 2017.”

https://blog.pimco.com/en/2018/06/chinas-property-market-bubble-or-balloon

[ocrenter]

[quote=Rich Toscano]Hi ocr – Where did you find that data on real estate to GDP ratio? That was a really interesting stat so I went looking for more info, and found this from PIMCO:

“We estimate China’s property market to be worth around US$22 trillion, approximately 1.8 times the size of its GDP in 2017.”

https://blog.pimco.com/en/2018/06/chinas-property-market-bubble-or-balloon%5B/quote%5D

https://www.google.com/amp/s/amp.businessinsider.com/chinas-property-bubble-is-bigger-than-subprime-2016-10

Business Insider had the ratio at 3.7:1 at end of 2016.

http://m.ltn.com.tw/news/focus/paper/1239502

The ratio of 5:1 comes from Taiwanese news outlet this week, sorry, not in English. I just checked the numbers, they are using $62 trillion as the current Chinese property valuation instead of the $22 trillion cited in the PIMCO article. Plus they “rounded up” from 4.4 to 5.

Valuation in an opaque market like China is always difficult, but 4.4:1 ratio seems legit given ratio was 3.7:1 in 2016. $700k plus for an average sized condo in Xiamen (GDP per capita is $14k) seems to be in line with the higher ratio estimate.

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