roach142_GREG BAKERAFP via Getty Images_xijinping

Economics

الصين تضحي بالنمو

Aug 23, 2022 Stephen S. Roach

نيوهافين ــ منذ أيام دنج شياو بينج، كان النمو الاقتصادي أكثر أهمية من أي شيء آخر من منظور قادة الصين. وكان النمو المفرط بنسبة 10% سنويا في المتوسط من عام 1980 إلى عام 2010 يُـعَـد على نطاق واسع الترياق ضد الركود النسبي الذي اتسم به عصر ماو تسي تونج، عندما كان الاقتصاد ينمو بنحو 6% فقط سنويا. ولكن في عهد الرئيس شي جين بينج، عاد البندول إلى الوراء، حيث أصبح النمو بنسبة 6.6% في المتوسط من عام 2013 إلى عام 2021 أقرب كثيرا إلى المسار في عهد ماو مقارنة بعهد دينج.

كان بعض التباطؤ حتميا، وهو ما يعكس جزئيا قانون الأعداد الكبيرة: فالاقتصادات الصغيرة أكثر قدرة على إطالة أمد النمو السريع. مع نمو اقتصاد الصين ــ من 2% من الناتج المحلي الإجمالي العالمي في عام 1980 في وقت انطلاقة دينج إلى 15% عندما تولى شي جين بينج السلطة في عام 2012 ــ أصبح التباطؤ الحسابي مسألة وقت فقط. وكانت المفاجأة أن الأمر استغرق وقتا طويلا قبل أن يبدأ التباطؤ فعليا.

من الممكن تحديد الناتج الصين الضائع بسبب التباطؤ كميا. فلو ظل نمو الناتج المحلي الإجمالي الحقيقي السنوي على المسار 10% في عهد شي جين بينج، بدلا من أن يتباطأ بنحو 3.5 نقطة مئوية منذ عام 2012، كان الاقتصاد الصيني اليوم ليصبح أكبر بما يزيد قليلا على 40% مما هو عليه.

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China’s Turning Point
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Stephen S. Roach
Only China Can Stop Russia
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Only China Can Stop Russia

Stephen S. Roach thinks President Xi Jinping will need to revisit the cooperation agreement he forged with Vladimir Putin.

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0 Comments on this paragraph, 32 Comments on this article

frank.piddisi Aug 28, 2022

This article and most of the commentary are almost all from a deficit mentality that if not altered will put the world at war. This is not necessary. Americans must come to welcome and respect Chinese power in whatever form the Chinese people legitimately choose to govern themselves. Democracy is not for every country nor is a one party state but a belief in sovereignty requires the acceptance of the other. From that starting point countries surely have much to negotiate however if it is done from the perspective of ‘floating all boats’ it is possible. The war in Ukraine educates us to understand that casting one’s morality onto the other is not a recipe for peace and prosperity. All countries have interests and the challenge is to address those interests through cooperation and collaboration. China’s one party state is not the same communism we witnessed emerge in Europe in the early part of the last century. America’s capitalism is not the same either in that the balance of wealth creation has shifted more toward capital and away from labour and consumer. The world is evolving necessarily toward globalism in spite of the forces to contain it due to population growth and environmental concerns. The question people must ask in every country is do we want to waste our wealth on destruction or share it through peace?
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Dawood Mamoon Aug 28, 2022

Professor Stephen Roach great article that reconfirms the recent worry of international commentators that Chinese growth trajectories should be revised concerning to China's more hawkish foreign policy that as you mentioned has lead to trade wars with the US. I have never visited China but one odd day I googled China in google images and it is about couple of years ago and the images of Chinese cities simply amazed me as most of the cities look like New York and Manhattan. Then I read that China has become a preferred tourist destination for Europeans and Americans and not to mention already high numbers of domestic tourism prevalent and encouraged in the country along with domestic commerce. Then most of cultural exchanges are also happening between the West and main land China. I understand that lot of it has to do with the informal marketing that benefited the country through liberal peripheral democracies like Hong Kong and Taiwan. Holly wood actors and the viewers who know actor Jacket Chen that lives in Hong Kong frequently visit China as much as they do visit Japan. Thus there is some evidence of liberal cultural values catching up in Chinese metropolitans. Then there is Giga factory of Tesla where by most of the European and American automobile brands are working in India but not Tesla EV. All this suggests that China is well placed to incorporate liberal values into the governance structure. But as many authors are writing that most of regions in the world are dominated by neo nationalism or that is being fed to their populations. Putin is defending Ukraine war to Russian people with neo nationalistic rhetoric that is actually a brazen display of imperialism. With globalization countries like EU and including China has shown significant constraint towards imperialist urges in the recent past that dominated the cold war era, but that is also changing. And as you very eloquently suggest this would cost China some 2-3 percentage point in economic growth that if accumulated would curtail the potential size of the Chinese economy in the future. In all this CDC and President Xi becomes the most important political personality to guide the country and its economy to exploit the decades of hard work that has been put by Mao and Deng.
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alex Finch Aug 24, 2022

Fact is the Shanghai and Hong Kong stock markets have grown by less than 3%pa in the last 20 years, underperforming by far most international markets (especially since Xi gained control). Going forward China’s economy and stocks may resemble Japan after 1989. Lifting a billion people out of poverty was a great achievement, but keeping them out of poverty is proving more difficult, especially with Xi stifling growth to pursue his dreams. The stock markets don’t lie, if they flatline so will China’s economy.
- Ian C Aug 24, 2022
  
  The performance of stock market does not necessarily reflect a country's economic growth. You said it yourself, the Chinese stock market has been growing at less than 3% pa for the last 20 years, yet we know the Chinese economy has been growing at a much higher rate than 3% pa over the same period. The stock markets do lie, especially when the US has ultra-low interest rates during the pandemic and all the extra money is pumped into the stock markets.
  - alex Finch Aug 24, 2022
    
    Growth in China was for years inflated artificially through massive over-investment in infrastructure and housing, without that growth would only have been 3%pa over the last 12 years, as indicated by the poor performance of the stock market. Far too many people were employed for far too long in construction (much higher than in any other country). Classic mistakes made by a developing economy. Xi is now attacking those companies, such as tech, that were doing a responsible and decent job, as though they are to blame for the problems his SOEs created.
    - Ian C Aug 25, 2022
      
      I am citing IMF real GDP growth data here to demonstrate Chinese economic growth. If you have a problem with how economic growth is calculated, you can take it up with IMF economists. It's funny how you say investment in infrastructure is a classic mistake by a developing economy. So what would your advice be, don't invest in infrastructures and let them fall apart? Like what the US is doing right now?
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Ian C Aug 24, 2022

Not everyone would agree with the state that "globalization had long benefited China more than any other country". I think globalization has benefited certain segments of the Chinese society, as it has benefited certain people in the US or Europe, but there are also many people feeling 'left behind' by globalization. Therefore Brexit, the rise of Trump, and the rise of Xi can all be seen in the same light: a deglobalization trend fuelled by popular resentment of globalization.
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vic lai Aug 24, 2022

According to Louie Gave, from a geopolitical standpoint, China has had 3 major macroeconomic weaknesses.
(i) The first one which the US exploited in 2018 has been her dependence on foreign semiconductors.
China is trying to deal with this by plowing money into its own semiconductor industry.
One way out is to lure Taiwan's TSMC talents to work in China, by giving them 4 or 5 times their current Taiwan salaries and other major benefits.
Doing so, China's idea is to develop a similar semiconductor ecosystem over time in her own country, which is as developed as that in today's Taiwan, and hopefully, like today's US, eventually replace it.
It's like Francis I of France luring the best artists in Italy during Italy's Renaissance to go to France and worked for him there, thereby "accidentally" paving the way for France's eventual dominance in art in Europe in the coming centuries.
Leonardo Da Vinci also went to France to paint for Francis I when he was old, bringing with him the not-for-sale Mona Lisa painting which is now being exhibited in the Louvre.
Since then, many other famous artists, like Pablo Picasso, also went to France.
Whether China can succeed in doing so remains to be seen.
---
(ii) The second weakness is that China still needs to import massive amounts of energy from abroad, and 80% of the energy that China imports is imported through oceans and the Strait of Malacca that are being controlled by the US.
So if the US ever decides to do to China what it did to Japan in the 1930s, and embargoes energy, then the Chinese economy could rapidly implode.
(iii) The third big weakness of China is that most of China’s trade remains denominated in US dollars, and so if tomorrow the US decides to do what it’s done to Iran or Venezuela, and say nobody is allowed to trade with China in US dollars anymore, then China's external trade will also implode, and her domestic economy would struggle.
---
- vic lai Aug 24, 2022
  
  Lately, the unexpected Ukraine War helps China dramatically to alleviate her last two major problems.
  ---
  On the second one, on energy, China all of a sudden becomes the only buyer of Russian energy in size.
  Of course Russia’s also selling energy to India and Thailand, but China shares a massive land border with Russia, and most of the energy infrastructure in Russia is geared towards western Europe, but that happens to be the one thing that China’s pretty good at ------ building infrastructure quickly and on the cheap.
  So in the coming years, we’re going to see dramatic investments by Chinese firms into the Russian energy sector, to basically capture a lot of energy there, energy that used to go west will now be going east.
  Western Europe's most important traditional economic hinterland, Russia, will gradually turn from being the EU's Canada to being China's Canada.
  ---
  On the third one, on the US dollar, this energy that China is now buying will be bought more and more in Renminbi (the yuan) rather than in US dollar.
  The fact that China, the world’s number one energy importer, is now shifting its energy trade to Russia, the world’s number one energy and commodity exporter, from US dollar to Renminbi, is a dramatic paradigm shift.
  China every month buys roughly 8 billion US dollars worth of energy and commodities from Russia, and that’s roughly 100 billion US dollars a year.
  That’s 100 billion US dollars that China used to have to earn by selling stuff to the US, before she can buy the energy she needs from Russia.
  But now, all of a sudden, China can simply print her Renminbi, and she gets to give Russia Renminbi for energy (and food) that she used to have to pay in US dollar.
  This changes the equation globally, because now the next thing that happens is that China can turn around and tell Indonesia :
  "Indonesia, I like your coal, which is so much better than this Russian crap, your coal is of such better quality than this terrible Russian coal, however, Russia gives me deals in Renminbi, for you I have to pay in US dollar, so unless you accept my Renminbi, I’m going to keep buying from Russia."
  And then China can do the same thing for Brazil and Australia with the iron ore, and for Saudi Arabia with the oil.
  Recently, for the first time ever, Russia has replaced Saudi Arabia and became China’s number one source for oil.
  Over the long term, if you’re Saudi Arabia and you look at this, you think okay maybe this isn’t such a big problem immediately, because Europe is desperate for energy, so whatever I’m not selling to China anymore I can sell to Europe.
  But Europe at the same time is saying, by 2035, they need to be running all electric cars.
  So, the current Ukraine War, and the diplomatic isolation of Russia, helps China solve two out of her three weaknesses.
  ---
  - vic lai Aug 24, 2022
    
    Note that today's Saudi Arabia has the real intention to further cooperate with China and so will agree to accept China's Renminbi as payment for her oil exported to China.
    (i) Saudi Arabia needs China's advanced weapons to help defend herself against Israel, and the US, for the sake of Israel, will never sell some of her most advanced weapons to Saudi Arabia.
    (ii) The Saudis also need China's help in further consolidating the basic infrastructure and constructing ambitious building projects in her own country, in order to diversify herself from oil to say a Dubai-like country in the coming decades, and only China the Infrastructure Monster, not today's US, has some of the world's best construction companies under the sun.
    ---
    The use of China's Renminbi by the Saudis is just the same as the traditional use of US dollar in this respect ------ it means the same ultimate real exchange of her oil for China's weapons and construction abilities.
    The resulting Renminbi FX reserves held by Saudi Arabia can be reinvested in China's domestic bond markets, or will even be used for international real and portfolio transactions between her and the other OPEC+ or BRICS countries.
    ---
    - vic lai Aug 24, 2022
      
      It's reported that China is going to build 8,000 schools for Iraq, and Iraq's construction funds will be coming from her daily sale of 100,000 barrels of oil to China.
      China's construction of a new airport in a southern city in Iraq has already commenced, and the two countries will further cooperate in the fields of electricity, communication, education, water supply, airport, and railroad.
      Iraq is one of the numerous cooperating members of China's OBOR Initiative.
      According to China's Ministry of Foreign Affairs, Iraq is an important cooperating partner of China, and Beijing will actively participate in the reconstruction of Iraq in the coming years.
      ---
      So, it seems to me that China's current attempt to fully secure her all-important foreign source of oil will turn the coming BW III Commodity-and-Energy Standard centered on her Renminbi into a de facto Chinese-Infrastructure Standard, which is expected to be co-existing and beneficially competing with the good old BW II US-Dollar Standard in the coming decades.
      ---
      My guess is that China will also actively participate in the future reconstruction of Ukraine after the ongoing war there has fully ended, if her participation there is not blocked by the West, and if Ukraine doesn't openly support Taiwan.
      But since the most wealthy eastern parts of Ukraine, where the coal mines and steel factories are located, have already been occupied by Russia, Ukraine will have to pay China mainly using perhaps her own wheat and other food cultivated in her precious black soil.
      ---
      - vic lai Aug 25, 2022
        
        During the coming sophisticated stage of BW III, China's Renminbi will have partly, or even mostly, replaced the US dollar as the main denominator of the global price of oil : so many Renminbi per barrel of oil instead of so many US dollars per barrel as in today's spot and futures oil markets.
        According to Luke Gromen, China at that time can well manage her Renminbi by adjusting her domestic monetary policies according to the global fluctuation of oil prices denominated in Renminbi.
        When the price of oil is too high, the People's Bank of China (PBOC, China's central bank) should raise interest rates, to calm down the heated domestic economy, causing the price of oil to fall as a result, and when the price of oil is too low, the PBOC can conversely cut rates to stimulate the domestic economy, to prevent the price of oil from falling further.
        ---
        The idea is to maintain the global price of oil relative to the Renminbi within a certain corridor, thereby keeping the Renminbi as good as gold for oil.
        By that time many other Asian and OBOR countries will have more or less linked their own currencies with the Renminbi, forming a new currency solar system of their own centered on the Renminbi (BW III) that's coexisting and competing with the old currency solar system centered on the US dollar (BW II).
        ---
        
        vic lai Aug 26, 2022
        
        According to a Youtuber, to cope with China's coming petroyuan (or petrorenminbi) and to maintain the global hegemony of the US dollar in the coming decades, the US may jettison petrodollar and relink her US dollar to both food and copper, so as to create a new form of US-dollar global hegemony in the future.
        ---
        (i) According to United Nations' data, the yearly global trading volume of food is about US$ 1.5 trillion, relative to that of oil of only around US$ 1 trillion.
        The US is the wolrd's largest food exporter.
        In 2020, the total amount of US food exports was 33% of the total world exports.
        The total sum of food exports of the US, Brazil, Argentina, Australia, and Canada, exceeds 70% of the total world exports.
        The US can turn her own currency into fooddollar in the future only by controlling those 4 countries.
        While both Australia and Canada are the US's loyal ally countries, Brazil and Argentina are situating in South America and so are within the controlled geopolitical zone of the US.
        It's therefore even easier for the US to establish food hegemony than oil hegemony.
        (ii) Among all the trading commodities, Doctor Copper has always been used to predict the overall health of the global economy.
        As new energies have gradually been replacing traditional energies in recent years, the global demand for copper keeps on rising very quickly.
        (a) In a new-energy electric car, the amount of copper needed is 4 times that of a diesel car.
        (b) When constructing an electricity-generating plant, the amount of copper needed for a wind-powered plant is 5 times that of a coal-fired power plant of similar scale.
        (c) When constructing a photovoltaic power station, the amount of copper needed is 2.5 times that of a coal-powered station.
        ---
        Currently China is the world's biggest importer of copper, occupying 43% of all copper imports, which is more than 3 times that of Japan, the world's second-largest importer of copper.
        To contain the rise of China, the US can cooperate with her allies and restrict the future exports of copper.
        ---
        
        vic lai Aug 26, 2022
        
        Another way for the US to counteract China's coming petroyuan is to unite with Israel and start a new round of wars in the Middle East, in order to deter the Arab countries in the Persian Gulf, and to remould the US dollar's oil hegemony.
        According to Henry Kissinger, control oil and you control nations; control food and you control people.
        The new US-instigated Middle East wars may deter the Arab countries or OPEC+ from using China's yuan to denominate and transact oil in the coming years.
        ---
        Still another way for the US to restrict the global rise of China's yuan in the coming years is to use agency wars against China, like what she's been doing to the EU's Euro through the ongoing Ukraine War. Today, thanks to the Ukraine War, the Euro has fallen rapidly to below parity with the US dollar.
        For the US, Taiwan is too small to become Asia's Ukraine. This island will quickly be shut off by China from the rest of the world once the war starts there, unless lots of American high-tech weapons have already been safely stored on the island.
        Japan, almost ten times the size of Taiwan, is a more suitable agency-war candidate for the US.
        Japan is of course not stupid, and will do whatever it takes to avoid becoming Asia's Ukraine, and so will probably refuse to jump on America's military bandwagon.
        Recently it seems that Japan has refused the US's suggestion of installing nuclear warheads in her own country, in order not to be completely wiped out by her 3 nuclear-weapon-owning neighbors. It's not clear whether there are some nuclear weapons already stored somewhere in US's naval bases in Japan.
        ---
        
        vic lai Aug 27, 2022
        
        Besides containing the potential future rise of China's yuan which will increasingly challenge the present global hegemony of the US dollar, the US should also strictly decouple from China economically.
        Today, it seems that the US under the Biden administration is prevented from doing so by
        (a) the Wall Street and the American corporations having massive portfolio and real investments and ODIs in China.
        This is reflected by the fact that, the US will be auditing in Hongkong the accounting records of China's companies now listed in the US, instead of the US's requiring all those Chinese companies to delist in the US stock markets in the near future.
        (b) the US's ally countries.
        This is lately reflected by South Korea's strange attitude towards the US's CHIP 4 semiconductor arrangement which is obviously against China.
        ---
        As a result, the US's coming economic decoupling from China will not be complete, and will only be half-baked, and future history may record that this proves to be a fatal mistake made by today's US, because this allows China to keep riding the American economic bandwagon and to eventually overtake her one day in the far future.
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  - vic lai Aug 24, 2022
    
    In recent decades, and currently also, in terms of bilateral trade between the US and China, China, as one of numerous net-exporting countries to the US, has always been one of many tributaries to the US, which resembles the ancient Roman Empire two millenia ago.
    The global value of the US dollar is being supported majorly by
    (i) the denomination of Saudi's global oil transactions and commodities and food of other countries in US dollar, and
    (ii) the global supply chains in general, and the net supply of China's merchandises to the US year-in and year-out in particular.
    ---
    But, thanks to this year's Ukraine War, and the fast recent revival of China, this unique-star solar system centered on the US is now starting to turn slowly into a double-star solar system, with both the US and China acting as the two Suns, and so the current Bretton Woods II US-dollar-standard trading system will gradually be transforming into a coexistence of both BW II and BW III, with the latter being a commodity-and-energy standard centered on China's Renminbi, as described upstairs.
    ---
    Recently, the reputation of the US dollar has been hurt non-trivially by at least three things.
    ---
    (i) The unfortunate money-printing MMT experiment performed by both the Trump and Biden administrations in the past two years, in reaction to the aftermath of the global pandemic, has debased further the US dollar, as in the latter stage of the ancient Roman Empire.
    That the US dollar's DXY have remained strong today is only due to
    (a) the fact that the US is still the cleanest dirty shirt relative to other developed countries,
    (b) the ongoing global BW II system still centered on the US dollar.
    But the US can no longer freely use MMT in the future in a too-bold manner to help mitigate her federal government's yearly deficit problem.
    (The MMT experiment has hurt not only the US, causing the ongoing runaway inflation in the country, but also Sri Lanka.
    Sri Lanka's current ordeal has been caused by
    (A) organic farming suggested by both Joseph Stiglitz and George Soros,
    (B) her first and bold application of MMT in an EM country.)
    ---
    (ii) The latest sanctions imposed on Russia early this year, in the form of confiscations of Russia's foreign exchange reserves and the rich Russian's personal private assets in the western advanced countries, has seriously damaged the traditional sanctity of Rule of Law and strict Protection of Private Property Rights in the West, which have always been the greatest comparative advantage of the broader democratic western world relative to the authoritarian eastern world.
    ---
    (iii) The US supercarrier Ronald Reagan failed to sail near Taiwan to protect the island during China's latest military drill there, sending a new signal to all US's current ally countries that, when a regional military conflict breaks out one day in the future, the US may no longer be a reliable military ally any more, since her navy may not quickly come to the rescue.
    ---
    The falling reputation of the US dollar will facilitate the gradual rise of BW III in the global financial arena which is centered on China's Renminbi, especially in Asia and along the international One-Belt-One-Road trading routes.
    ---
    - vic lai Aug 25, 2022
      
      According to Investopedia,
      "(i) Irrational exuberance is unfounded market optimism that lacks a real foundation of fundamental valuation, but instead rests on psychological factors.
      (ii) The term was popularized by former Fed chair(man) Alan Greenspan in a 1996 speech addressing the burgeoning internet bubble in the stock market.
      (iii) Irrational exuberance has become synonymous with the creation of inflated asset prices associated with bubbles, which ultimately pop and can lead to market panic."
      ---
      The exceptionally lax monetary and fiscal policies pursued by the US following the breakout of the pandemic in early 2020 explains the particularly good performance of the US stock (and housing) market relative to that in China in the past 2 years, when in the same period of time China has kept a tight rein on her domestic money supply growth.
      Also, the nominal (and real) interest rates in the US have been kept at a very low level since the GFC of 2007-09, thanks to her several rounds of QEs.
      Together with the US's shale revolution, and her booming young population in their 30s, the US stock market has therefore outperformed that in China in the past decade.
      Even though the US's everything asset bubble pops sometime in the future due to the Fed's coming hawkish interest rate hikes, the present retiring population of the US on average may still be the richest retiring population in human history.
      ---
      I hope the above can help explain the differing opinions of ALEX FINCH and IAN C.
      ---
      - vic lai Aug 25, 2022
        
        A persistently close-to-zero nominal interest rate environment, or a persistently negative real-interest-rate environment in the West, is a kind of financial repression, or a falsification of the genuine market price of funds in the free private financial markets, resembling the much distorted price signals in the past USSR Soviet era, or in today's Japan.
        The Invisible Hand in the West has therefore been misdirecting the most-valued allocation of scarce real human and non-human resources in their macroeconomies for a very long period of time.
        ---
        It has, among other things,
        (i) caused persistent zombification of many corporations in the West,
        (ii) sustained the everything asset bubble in the West, creating lots of paper wealth and a positive wealth effect which keeps
        (a) inflating the West's unhealthy stock and housing market bubbles,
        (b) sustaining the household's debt-financed consumption,
        (c) encouraging the private corporations to borrow cheaply in the financial markets to help distribute dividends and buy back their own shares, rather than real-investing more in their respective industries,
        (iii) encouraged the present generation of people to overborrow from the future generations, and to keep overspending today.
        ---
        Much fewer valuable scarce human and non-human resources are therefore allocated to the West's real economy or Main Street for genuine-wealth-creating real technological investment purposes over the years, thereby allowing China to more easily catch up with the West both economically and militarily.
        ---
        
        vic lai Aug 25, 2022
        
        " ...... this US penchant for blaming China will ignore, or at best underestimate, the damage to the development path of the United States that corporate financialization has wrought."
        ---
        From "China’s Development Path: Indigenous Innovation and Global Competition" by William Lazonick and Yin Li.
        ---
        
        vic lai Aug 29, 2022
        
        Today, instead of the commonly mentioned economic decoupling of the US and China, in the form of the US's reshoring or friend-shoring, the world is actually witnessing a rejuvenation of "Chimerica," a term first coined by Niall Ferguson and Moritz Schularick in late 2006, in which
        (a) the US is strengthening her US dollar partly to import much more cheaper trinkets from China to help mitigate her ongoing runaway inflation problem.
        (b) the Fed is busy hiking the interest rates to help fight domestic inflation,
        while, at the same time, in an almost completely opposite manner,
        (ai) China is weakening her yuan vis-a-vis the US dollar, to promote her net-exports to the US, in order to support the country's aggregate demand and so to help the net-debtors in the country more easily deleverage as a result of the government's recent eventual active popping of her massive real-estate bubble,
        (bi) the PBOC (China's central bank) is also gradually lowering the interest rates to boost GDP growth (China's core inflation rate is less than 1 percent) and so to facilitate the country's painful deleveraging or balance-sheet-repairing processes.
        ---
        (A) While geopolitically the US and China are fiercely competing with each other (think Taiwan), macroeconomically they seem to be fully cooperating with each other, at least in the international trading area.
        (B) After the GFC of 2007-09, China's 4-trillion-yuan investment spree was helping the US then to deleverage, this time, after the breakout of the pandemic, the US's "QE for the people" is helping China to deleverage ------ another manifestation of the good old "Chimerica."
        ---
        So far as interest rate changes is concerned,
        (i) in the US, the Fed is no longer the US portfolio investors' friend, and good news (stronger-than-expected macroeconomic statistics of all kinds) is bad news (the Fed will not stop hiking rate),
        (ii) in China, the PBOC is now the Chinese investors' friend, and bad news (worsening real estate market or much lower-than-expected GDP growth) is good news (the PBOC will keep on lowering rates or easing monetary, fiscal, and exchange rate policies).
        So, the US dollar will keep strengthening against the yuan as a result.
        ---
        The diametrically opposite monetary policies now being pursued by the US and China, reflecting their opposite trends of inflation in their own countries, shows once again the weakness of the popular argument that today's runaway inflation in the West was mainly caused by the global-pandemic-induced distuptions in the global supply chains, and energy, commodities, and food disruptions as a result of the Ukraine War.
        The differing inflation rates of both countries can simply be explained by the difference in their money supply growth.
        Unlike the US in the past 2 years, China has kept a tight rein on her domestic money supply growth, hence her almost non-existent domestic inflation in the same period.
        ---
        
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alex Finch Aug 23, 2022

China originally adopted American capitalist policies and now seems to be pivoting over to European socialist policies. Both China and Europe have huge aging populations resulting in slowing economies that will need to rely heavily on exports and globalization. The last thing China needs is a destabilization of existing relationships. As Nancy Lazar correctly claimed several years ago on Wealthtrack, China’s economy will weaken and be no match for America. Hopefully Xi is slowly realizing that his policies have only made things worse.
- Ian C Aug 24, 2022
  
  China has never adopted American capitalist policies. The Chinese economy has always featured heavy state intervention, with state-owned enterprises dominating key sectors of the economy. The Chinese themselves (arguably the best authority on this) have said they have a market economy with Chinese socialism characteristics. When did they say they adopted an American-style capitalist policies?
  - alex Finch Aug 24, 2022
    
    China’s major crackdown on it’s large Technology companies was a result of them becoming „too capitalistic“ in the eyes of the powerful SOEs (who backed damaging excess construction). That was the start of Xi‘s recent pivot from capitalism to socialism. This pivot will weaken China in the same way socialism has weakened Europe (although the Dax is up 600% compared to the Shanghai Index up just 100% in 20 yrs). Xi‘s policies are good for America. He is using Taiwan as a distraction from his mistakes. China’s economy is already weakening rapidly, it’s undeniable. It’s aging population and Xi’s self-serving crackdown on tech will make things worse. That’s good for America.
    - Ian C Aug 24, 2022
      
      The entire premise of your argument is wrong. China has never adopted an American-style capitalist economy, so it wasn't "too capitalistic" to begin with. Either way, I rather have a crackdown on capitalism than rampant capitalism. The 1% is responsible for most of the corruption in America. When you say "China's economy is weakening rapidly", you do realise that China is experiencing faster real economic growth than America right? If China's economy is weakening, what does it say about America's economy.
      - alex Finch Aug 24, 2022
        
        Listen to Nancy Lazar on Wealthtrack April 26, 2019. Everything she predicted for China has come true. She predicted real growth in China of 3% at best. China today is probably in recession. Xi and his cronies made huge mistakes. That’s good for America. Not so good for China. China’s stock market is an indicator of the health of China’s economy going forward. The stock market is flat, and will probably stay flat.
        
        Ian C Aug 24, 2022
        
        You seem obsessed with stock market performance, which is a poor indicator of a country's real economic growth. I don't know where you get your data from when you say "China today is probably in recession." According to IMF data, Chinese real GDP growth is higher than America.
        https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD
        
        alex Finch Aug 24, 2022
        
        If the stock market is a poor indicator for an economy’s performance, perhaps China’s real estate and construction industries are a better indicator? Half your developers are going broke.
        
        Ian C Aug 25, 2022
        
        GDP is the best indicator for an economy's performance. Instead of trying to find proxy such as stock market or construction sector, why don't you just use GDP as a measure for a country's economy, almost every economist on the planet is doing that.
        
        alex Finch Aug 25, 2022
        
        You don’t have to be an economist to know that when GDP is allowed to overheat, then recession or crash soon follow. China thought it could run a high GDP without classic consequences. Now Xi thinks he can again deal with the mess his way without taking any advice.
        
        Ian C Aug 25, 2022
        
        So you think the Chinese economy is overheated and a crash will soon follow? Why don't you make a prediction about when the crash will happen? You can even write a book and call it "The Coming Collapse of China".
        
        alex Finch Aug 25, 2022
        
        That book won’t be written in China because telling the truth in China can get you locked up in jail.
        
        Ian C Aug 25, 2022
        
        You obviously don't know that there is book already called "The Coming Collapse of China", written in 2001 by Gordon Chang. I am surprised you haven't heard of it since you are always ranting about Chinese economy crash. Care to make a prediction about when the Chinese economy will crash?
        
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