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China

Discussion in 'Politics' started by Solfege, Jan 25, 2018.

  1. Solfege

    Solfege Auror DLP Supporter

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    Moved from here. -Sesc

    This, I agree, is a problem. The Chinese, Xi in particular, wants all the advantages of an open system while closing their own off to us. It's a fundamentally political imbalance that we ought to resolve, but is difficult given their bureaucratic-authoritarian gatekeeping system and Xi at the top. Unsure how a trade war would result --- it might even accelerate the formation of their domestic consumer economy.

    My warning was not against checking hostile economic practices but against the arrogance of solutions with unintended consequences, and, given that complexity, the pains one should take on measuring that which is steady-state "hostile" versus the naturally transitory.
     
    Last edited: Jan 25, 2018
  2. Darth_Revan

    Darth_Revan Secret Squirrel Prestige DLP Supporter

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    China's economic practices are beyond abusive. My contention, though, is that the blowback on us would be near-catastrophic, so the risk-reward calculation makes a balls-to-the-walls trade war prohibitive.
     
  3. Agayek

    Agayek The Chosen One

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    Which is why it hasn't happened yet, and so China continues to be a fuckwit, because there's no consequences for it.

    I don't particularly like the idea of an all-out trade war, but when you weigh China becoming an increasingly egregious fuckwit over the next forty years and driving the global economy into either China or ruins or taking the hit now and mitigating its damage, it's not nearly so cut and dry.
     
  4. Chengar Qordath

    Chengar Qordath The Final Pony Prestige

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    Exactly this. China's not going to stop their "beyond abusive" economic practices when they face absolutely no consequences for them. A lot of the logic behind this seems similar to 1930's appeasement, except with trade policy instead of territory.
     
  5. Darth_Revan

    Darth_Revan Secret Squirrel Prestige DLP Supporter

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    I think you're underestimating what the phrase 'near-catastrophic' means.

    Murder-by-suicide-pact isn't a viable option.
     
  6. Agayek

    Agayek The Chosen One

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    The alternative is to let China continue and make the inevitable collapse from that even worse.

    There's no good answer here, but somewhere along the line there's a point where "take it now, while we have resources and can prepare/respond accordingly" is better than "continue to push the problem on to the next generation, and let it fester and worsen".

    Kinda like climate change, now that I'm thinking about it.
     
  7. Darth_Revan

    Darth_Revan Secret Squirrel Prestige DLP Supporter

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    Alternatively, given the changes that have taken place economically in China over the past 50 years, time might actually serve to mitigate their behavior.
     
  8. Agayek

    Agayek The Chosen One

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    When they're consistently rewarded for being, functionally, economic trolls?

    There's no incentive in place for them to temper themselves, because they're seeing more success for bad behavior, and everyone's collectively willing to tolerate it and wait them out. They might spontaneously grow out of it and stop out of the goodness of their heart, but as you well know, nation-states don't act out of emotion. The only thing that will drive them to change is a concrete, compelling reason to change, and continuing to ignore their bullshit does nothing but gives them a compelling reason to stay the course.
     
  9. Solfege

    Solfege Auror DLP Supporter

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    Indeed. And my earlier point was that so far as we can see of certain relevant parts, it isn't out of the goodness of their hearts that they evolve. It isn't spontaneous. It was wholly foreseeable that China would eventually, for one, begin accumulating intellectual goods of their own that would demand a standard of enforcement; that their middle classes would begin enacting more environmentally friendly and health-conscious political pressures; that they would begin eating more meat and consuming entertainment and luxuries of their own; that the qualities of their factory production lines would rise --- not towards the high end stuff yet, but certainly of middling means and prices.

    Growing classes of economic actors create internal pressures that affect the direction of national policy far greater than some abstruse political line drawn by a grumbling international client. It is not of emotion but of economic development and the changing of self-interest through time. Or is the transition from agricultural to industrial to service economy also magical hogwash to you?

    Now what we should do is examine the picture fully, and see the trends that truly trouble us as would shape the long term development of markets. As @pbluekan pointed out rightly, the abuses done to Western corporations for access to the Chinese market is one such thing. This is one that may portend a deeply structural trend, or a passing fad as the Chinese economy reaches parity and Chinese corporations are secure enough that the government permits free-form competition (I would explain and point to examples of accommodation in the SEA region but will skip for brevity), but I am not willing to take the bet on this one. In particular it depends on how political winds blow and Xi's successor/s.

    It seems appeasement to you because you've created a false dichotomy. I've seen so far no arguments that a trade war would elicit the results you or Agayek seek. Chinese producers, particularly of apparel, foodstuffs, and electronics, would hurt; but the U.S. would hurt more. Especially American-designed electronics, where the majority of profits go to design work. The situation has changed drastically since 20 years ago. The American markets for Chinese goods are fairly saturated; their fastest growing markets are India, Latin America, and Africa. Whereas the greatest growth for American multinationals is... China.

    The American technologies China need they can buy elsewhere, in Europe or Japan. Or produce themselves: the iPhone can be replaced by lower-cost imitators, or Samsung, and they have their own burgeoning AI sector. In the meanwhile, we would be hard pressed to find cost-effective replacement factories for all the goods on which our Walmarts and our hinterlands, with every year passing more distant and irrelevant to the economies of our first-tier cities, depend.

    In short, it seems to me America needs China more than China needs America. It'd be painful for China, but to repeat --- it is not what it was 20 years ago, when China still needed manufacturing know-how and had barely a GDP per capita, and if America threatened to pull international aid packages the world still bowed to its will. Multipolarity, diversification, was inevitable with rising economies. Without America, Europe seeks to embiggen ties with Africa and the Pacific Rim and, yes, China. TPP moves on and China finances infrastructure in poorer countries for even more markets to buy their products.

    The Chinese are currently far better positioned to weather a war of attrition, with the foreign reserves to match, substantive ties elsewhere to eventually make up the shortfall, and the biggest consumer market of the next generation still to come into its own. India is a much poorer market for us, and will be for another... 20(?) years yet.

    Also. International trade is by far and away a second-seat issue to matters of internal political stability in China, where Xi has to be seen dealing with an American administration that respects him or not at all. They will take the hit. They will probably come out the better, and be that much closer to economic hegemony for it.

    Given all this, the threat of a trade war seems a much more useful tool on the negotiating table than an actual war. We should use it, if so, and other tools at our disposal including selective tariffs to press their pressure points (real, not imagined) while diplomatically working to resolve the greater underlying issues.
     
    Last edited: Jan 26, 2018
  10. Chengar Qordath

    Chengar Qordath The Final Pony Prestige

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    I think it should be obvious that everyone would much prefer the threat of a trade war getting China to modify their behavior to an actual trade war. After all, it gets the desired result at a far lower cost.

    I think you underestimate the importance of a bull market to China's internal stability. The CCP certainly seems to fear that any sort of economic slowdown will make all those simmering internal problems flare up again. The unwritten deal they've had with the populace for the last 20+ years has been that as long as the economy keeps surging, they'll stay quiet about the lack of civil and political rights, and politely ignore the occasional bits of ethnic cleansing and repression. An economic downturn would change that.

    It's also worth pointing out that the US is far from the only nation annoyed by China's trade practices. As noted up-thread, Trump's proposed solar panel tariff is the same one the EU has had for the last five years, and India's been doing much the same.
     
  11. Solfege

    Solfege Auror DLP Supporter

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    Well aware. The nationalism intrinsic to a trade war would give the Chinese something to rally around, however; if exempting the middle class. There is much care about how that downturn comes about. If Xi or China is seen as disrespected* in the proceedings...

    This is precisely why nowish seems a decent time to press these negotiations, with China struggling recently and Trump's pursuance(?) of a weaker dollar. As to your point on a trade war serving the same purpose for greater cost --- this is where we part. I don't think it would. I think it would result in a far greater departure from our planned destination, if not a break altogether.

    Xi conceding to an overtly belligerent U.S. would demean the currency he's built up within the CCP and among his people. As he's been willing to 1) centralize institutional power within him like no other --- I don't believe any of the other previous leaders established such a close relationship with the army, as just one example, despite their nominal titles as Heads of the Central Military Commission; 2) narrow the channels of intellectual and cultural thought to Western influence in pursuit of a uniquely Chinese path forward, particularly as the legitimacy of a future CCP depends on a rehabilitated ideological legacy; 3) generally crack down on dissent against the CCP (as opposed to dissent against local/regional governments), in no small part as the economy has wavered these few years...

    I don't think Xi would backpedal from this authoritarian trend, not as he's consolidated his position so successfully and built up his own core cadre. And much more is carried on Xi than just his personal success --- I did mention his ambitions of a re-legitimated CCP and the path towards a society of Chinese Dreams (whatever that means). He'd rather double down, flex the apparatus further if he had to.

    You're probably underestimating the ways in which the CCP has been able to build "pipe valves" in their digital and organizational infrastructure to release popular pressures, track grassroots opinions almost seamlessly in the aggregate and convert said grassroots data into policy and public relations. Add their ability to direct the state-owned enterprises and enlist the most successful private companies to help pad the party line at the margin... management of the Chinese political economy may in practice be as decentralized as that of a federal democracy's, but they can do at least this much.*** The CCP has survived thus far because they're very, very flexible in their methods. All of this will cushion some of the effects you'd predict. (Granted, I still have questions about how other systems sort out.)

    In the case we bluff and China calls it, we'd best hope we've moved to a better relative position by then. But I also think we have far more tools at our disposal, if we just pause for a sec, than the bluster of full-on trade war or the shadow threat of single tariffs.

    *Like, I don't know if you're aware of that Bush/Jiang Zemin embarrassment, where Bush pulled Jiang by his suit jacket, as an afterthought, into the photo op just as Jiang was turning away. The Chinese press were mortified, they ended up cutting out virtually all coverage of the White House visit to some other distraction. Cultural pressures, man.

    **Also, I think most Han Chinese don't particularly care about the ethnic cleansing...? They being, after all, the interlopers/settlers in Xinjiang/Tibetan/minority territories benefiting from martial order. Like Israelis of the West Bank.

    ***Who am I kidding, you guys all think China's a lot more centralized than it really is.

    @Chengar Qordath edited for greater detail.
     
    Last edited: Jan 26, 2018
  12. Darth_Revan

    Darth_Revan Secret Squirrel Prestige DLP Supporter

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    Never make a threat that you're not willing to back with action. Trade war with China wouldn't end well for us, so it makes very little sense to afford PRC the opportunity to call our bluff and expose our weak position.

    In many respects, these are all the problems that TPP was meant to address, but as the American public is suddenly averse to leveraging globalism because "it hurts the American worker" (more, we ask, than being fucked with our pants on?), then this is why we can't have nice things.
     
  13. Invictus

    Invictus Prisoner

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    The Chinese bubble will explode soon or later .Controlling and minimizing how much it will affect other countries, their countries, should be a priority for any sane Western government. Yet... People continue to talk somewhat aggressive on China while doing very little of concrete.

    There are WTO tools that should be used more, and western governments should get better at being selective protectionist against Chinese investment. Both are happening, slowly. So future looks better.
     
  14. Darth_Revan

    Darth_Revan Secret Squirrel Prestige DLP Supporter

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    To what bubble are you referring and what basis do you have for your confidence in that statement?
     
  15. ASmallBundleOfToothpicks

    ASmallBundleOfToothpicks Professor

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    I think you may be overestimating how nationalistic the Chinese population are, currently. They're dealing with a malfunctioning government that cracks down viciously on dissent. It's no wonder every Chinese person of means is moving to Australia as soon as they can afford to. Hell, the even military isn't loyal to the nation, it's loyal to the Party.

    Xi is doing a fine job of demeaning the political capital he's built up with the Chinese people all on his own, actually. Consider his speech to his military, where he all but told them that he'd be laying off most of his troops so he can afford to modernize Chinese war machine. Pair this with a veterans service that isn't giving out benefits, which is why there was a protest from veterans in the capital, Xi's got a lovely little tempest brewing is his teapot. Also, consider the stock market debacle, where his officials crashed it in a few months.

    Of course he isn't going to backpedal. He wouldn't have started grabbing power in the first place unless he was committed to seeing it through.

    "Pipe valves," huh? Is that what we're calling disappearing political dissidents and harvesting their organs these days?

    Yeah, definitely. However, something needs to be done to modernize China's economic practices, or else the whole house of cards is going to crumple, and fast. And look, this isn't a "one size, fits all" solution thing. It's a "learn from our mistakes and everyone wins" situation.

    Nah, just pretty standard authoritarian government stuff. They need Fearless Leader to look powerful to maintain their control. Bush being a jackass accidentally made Jiang look weak, which the Chinese media could get in hot water for propagating, so they blacked it out.

    Pretty much how I understand it.

    Oh no, China isn't centralized. In many ways, that's kind of the problem.

    The clearest example is their military, which still doesn't have a Joint Command. This leads to a certain degree of political infighting between their armed forces. Granted, that is desirable for an authoritarian government trying to maintain power against internal pressures... but it means that they will not be able compete with any other modern military due to a lack of cohesive strategy. However, the same internal pressures lead to a problem where the central government cannot get reliable information about what's going on in the prefectures. Local bureaucrats are given goals to meet by the central government, and if they fail to meet them, they are replaced. So the bureaucrats are incentivized to lie about the reality on the ground to maintain their position. This cycle builds on itself, creating a situation where corruption is the only available option for local administration to get the resources they need to run their regions, since central government is getting bad data. It also attracts the kind of people who are interested in taking advantage of the situation to line their own pockets. And it isn't like Xi's "anti-corruption campaign" has anything to with stopping corruption, so this isn't going to get fixed anytime soon.

    China is basically a whole bunch of political machines duct taped together, pulling in different directions, while maintaining a facade of unity so that the whole mess doesn't collapse in a heap. If Xi really wants to fix that catastrophe, then I wish him the best of luck. I also recommend he look into growing China into a multi-party parliamentary republic, and a reasonably regulated market economy, instead of the authoritarian crap he's trying.
     
  16. Invictus

    Invictus Prisoner

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    You really should learn to read financial news if you're going to be so bullish about economy .
    http://uk.businessinsider.com/chinese-debt-risk-to-financial-stability-2017-9
    https://www.ft.com/content/ee211c6e-d100-11e7-9dbb-291a884dd8c6
    http://www.telegraph.co.uk/business/2017/08/05/fresh-fears-chinas-debt-bubble-could-burst/amp/
    https://www.google.com.br/url?sa=t&...FjAFegQICRAB&usg=AOvVaw1K1XBvb86tf5Pf1DOQ2OC-
    https://www.google.com.br/url?sa=t&...FjAGegQIChAB&usg=AOvVaw1aMC1RO5RpZWRLGNNQV12s
    https://www.google.com.br/url?sa=t&...DBAB&usg=AOvVaw04pOaX6h2niniuEDO0DgaD&ampcf=1
    https://www.google.com.br/amp/s/www...operty-bubble-keeps-getting-bigger-1474284790
    https://www.wsj.com/amp/articles/bursting-chinas-credit-bubble-1461105854
    https://www.wsj.com/articles/how-chinas-financial-cracks-could-spread-1508232602

    Chinese lending is reckless at best and insane at worst. Lots of bad lending due to political reasons, from countries that will never be able to pay back like many African ones (or Pakistan or Southeast Asian countries) to the many unprofitable factories that keep working thanks to cash injections.
     
  17. pbluekan

    pbluekan Groundskeeper DLP Supporter

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    One of the major considerations that needs to be kept in mind is if these sort of evolutionary changes in the Chinese economy can happen in a timely manner. Concerns about the environment aside (I’m american. Pot, kettle.) it’s my opinion that China simply doesn’t have the time to develop these sort of mechanisms naturally.

    So, on the heels of @Invictus‘ post about bubbles and economic blowouts...

    Let’s go back to the original discussion about the murder-suicide of a trade war. The question is, if they are simply let lie, will the chaos lead to a slow overall systemic collapse that is, in the end, worse? Would it not then be better to sign onto that murder-suicide and rip off the proverbial bandaid?

    For that matter, we are in a bit of a bubble and most everyone is expecting a fairly major market correction in the next year or two. Just watch the gold and bond markets. They’ll start ticking up here at a pretty steady pace. Or you can watch the VIX futures ETFs. They’ve been oddly stable for the last year or so, but it’s been shaky recently.
     
    Last edited: Jan 26, 2018
  18. Agayek

    Agayek The Chosen One

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    The currency flight taking place from China seems to indicate most of the well-off Chinese don't have a great deal of confidence in its economy, for one.
     
  19. Invictus

    Invictus Prisoner

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    Actually, let me complement that. Go read about the Japanese Lost Decade (or Score) Crisis in 1991 and what brought it. Then you read those articles again. And then you take a look at how the Belt and Road initiative works .
     
  20. Chengar Qordath

    Chengar Qordath The Final Pony Prestige

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    Which all ties back into how the CCP needs constant explosive economic growth to maintain internal stability. The CCP is deliberately making this bubble go for as long as possible to put off the inevitable problems that will come with an economic slowdown. Of course, the bigger the bubble grows, the worse it will hurt when it finally pops.