Moon of Alabama Brecht quote
August 24, 2019

U.S. Decoupling From China Forces Others To Decouple From U.S.

The U.S. is decoupling itself from China. The effects of that process hurt all global economies. To avoid damage other countries have no choice but to decouple themselves from the U.S.

Today's Washington Post front page leads with a highly misleading headline:

The headline above the article is also wrong:

Trump retaliates in trade war by escalating tariffs on Chinese imports and demanding companies cut ties with China

It was China, not Trump, which retaliated. Trump reacted to that with a tweet-storm and by intensifying the trade war he started. The piece under the misleading headline even says that:

President Trump demanded U.S. companies stop doing business with China and announced he would raise the rate of tariffs on Beijing Friday, capping one of the most extraordinary days in the long-running U.S.-China trade war.
...
The day began with Beijing’s announcement that it would impose new tariffs on $75 billion in goods, including reinstated levies on auto products, starting this fall. It came to a close Friday afternoon with Trump tweeting that he would raise the rate of existing and planned tariffs on China by 5 percentage points.

Beijing’s tariff retaliation was delivered with strategic timing, hours before an important address by Powell, and as Trump prepared to depart for the G-7 meeting in Biarritz.

After Trump's move the stock markets had a sad. Trade wars are, at least in the short term, bad for commerce. The U.S. and the global economy are still teetering along, but will soon be in recession.

The Trump administration is fine with that. (As is Dilbert creator Scott Adams (vid).)

U.S. grand strategy is to prevent other powers from becoming equals to itself or to even surpass it. China, with a population four times larger than the U.S., is the country ready to do just that. It has already built itself into an economic powerhouse and it is also steadily increasing its military might.

China is thus a U.S. 'enemy' even though Trump avoided, until yesterday, to use that term.

Over the last 20+ years the U.S. has imported more and more goods from China and elsewhere and has diminished its own manufacturing capabilities. It is difficult to wage war against another country when one depends on that country's production capacities. The U.S. must first decouple itself from China before it can launch the real war. Trump's trade war with China is intended to achieve that. As Peter Lee wrote when the trade negotiations with China failed:

The decoupling strategy of the US China hawks is proceeding as planned. And economic pain is a feature, not a bug.
...
Failure of trade negotiations was pretty much baked in, thanks to [Trump's trade negotiator] Lightizer's maximalist demands.

And that was fine with the China hawks.

Because their ultimate goal was to decouple the US & PRC economies, weaken the PRC, and make it more vulnerable to domestic destabilization and global rollback.

If decoupling shaved a few points off global GDP, hurt American businesses, or pushed the world into recession, well that's the price o' freedom.

Or at least the cost of IndoPACOM being able to win the d*ck measuring contest in East Asia, which is what this is really all about.

Trump does not want a new trade deal with China. He wants to decouple the U.S. economy from the future enemy. Trade wars tend to hurt all involved economies. While the decoupling process is ongoing the U.S. will likely suffer a recession.

Trump is afraid that a downturn in the U.S. could lower his re-election chances. That is why he wants to use the Federal Reserve Bank to douse the economy with more money without regard for the long term consequences. That is the reason why the first part of his tweet storm yesterday was directed at Fed chief Jay Powell:

In his order for U.S. companies to withdraw from China, some close to the administration saw the president embracing the calls for an economic decoupling made by the hawks inside his administration.

The evidence of the shift may have been most apparent in a 14-word tweet in which Trump appeared to call Xi an “enemy.”

“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” he said in a Tweet posted after Powell gave a speech in Jackson Hole that contained implicit criticism of Trump’s trade policies and their impact on the U.S. and global economies.

Jay Powell does not want to lower the Fed interest rate. He does not want to increase bond buying, i.e. quantitative easing. Interest rates are already too low and to further decrease them has its own danger. The last time the Fed ran a too-low interest rate policy it caused the 2008 crash and a global depression.

Expect Trump to fire Powell should he not be willing to follow his command. The U.S. will push up its markets no matter what.

From Powell's perspective there is an additional danger in lowering U.S. interest rates. When the U.S. runs insane economic and monetary policies U.S. allies will also want decouple themselves - not from China but from the U.S. The 2008 experience demonstrated that the U.S. dollar as the global reserve and main trade currency is dangerous for all who use it. Currently any hiccup in the U.S. economy leads to large scale recessions elsewhere.

That is why even long term U.S. ally Britain warns of such danger and is looking for a way out:

Bank of England Governor Mark Carney took aim at the U.S. dollar's "destabilising" role in the world economy on Friday and said central banks might need to join together to create their own replacement reserve currency.

The dollar's dominance of the global financial system increased the risks of a liquidity trap of ultra-low interest rates and weak growth, Carney told central bankers from around the world gathered in Jackson Hole, Wyoming, in the United States.
...
Carney warned that very low equilibrium interest rates had in the past coincided with wars, financial crises and abrupt changes in the banking system.
...
China's yuan represented the most likely candidate to become a reserve currency to match the dollar, but it still had a long way to go before it was ready.

The best solution would be a diversified multi-polar financial system, something that could be provided by technology, Carney said.

Carney speaks of a "new Synthetic Hegemonic Currency (SHC)" which, in a purely electronic form, could be created by a contract between the central banks of most or all countries. It would replace the dollar as the main trade currency and lower the risk for other economies to get infected by U.S. sicknesses (and manipulations).

Carney did not elaborate further but it is an interesting concept. The devil will be, as always, in the details. Will one be able to pay one's taxes in that currency? How will the value of each sovereign currency in relation to SHC be determined?

That the U.S. dollar is used as a global reserve currency under the Bretton Woods system is, in the words of the former French Minister of Finance Valéry Giscard d'Estaing, an "exorbitant privilege". If it wants to keep that privilege it will have to go back to sane economic and monetary policies. Otherwise the global economy will have no choice but to decouple from it.

Posted by b on August 24, 2019 at 19:22 UTC | Permalink

Comments
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NemesisCalling @97: I conceded that Trump is leading us to calamity ...

@81 you suggest that Trump is a "world historical figure" that is ushering in a future that is "... reinvigorated by world spirit showing itself to us in its truthfulness and freedom. [No longer] ... slaves to the financial games ..."

While you believe that Trump can't stop the pain to come, you appear to give him credit that he doesn't deserve and I think you make the mistake of getting ahead of yourself wrt America being "done". I don't think the establishment / Deep State shares your optimistic pessimism (a phoenix-like rebirth) and they are acting to ensure that USA/AZ Empire prevails. A better notion might be that Western democracy and international order is "done" - to be replaced by a stronger globalism (or the trappings of such). Whether this brings a glorious "world spirit"-infused future or just greater resentment is an open question.

What we've seen, time and time again, is that the establishment masks failure by doubling down and stacking the deck at every turn. That's why your "dreams" of a glorious future are met with skepticism. Especially when those dreams laud Trump as the agent of that future.

<> <> <> <> <> <>

The link you provide @23 is important for understanding what you mean when you talk about the "dialectic of globalization". However, IMO that dialectic is independent of Trump (so crediting him with an assist is confusing).

b's view of the world decoupling from USA/West is optimistic. We seem to be moving quickly toward a point where countries have to chose a side. Some will side with the West, others will side against the West. It's not clear to me how that shakes out.

Posted by: Jackrabbit | Aug 25 2019 6:38 utc | 101

Neo-Liberalism = Middleman-itis.

In pre-1970 Oz, Australia manufactured everything from ships, planes and motor vehicles to shoes and shirts - to name but a few. Now, the only way to make a living from most of these redundant industries is to dream up an highly imaginative marketing 'angle' and create a niche/ boutique market for stuff that only your company can manufacture. You also need to invest in Patent and Unique Technique protection by suing the ass off anyone, anywhere, who infringes on your protected turf.

Posted by: Hoarsewhisperer | Aug 25 2019 6:55 utc | 102

Uncle Sugar has been trying to decouple the EU from Russia since around First Obama (Fuck the EU!") without much success too (although we just about re-divided the EU). It's like anybody who has built up their economy and not trashed it to get filthy rich is now going to be our enemy, especially our former friends, we'll never forgive them.

I can't think of a stupider plan.

Posted by: Bemildred | Aug 25 2019 7:30 utc | 103

Really good thread, way above my limited intellect but I have learned a lot from both sides here !
This link seems to make a lot of sense and gives a way forward - - -
https://www.doubledown.news/watch/2019/6/august/capitalism-in-crisis-socialism-or-fascism-yanis-varoufakis
Would be interested in comments, thanks

Posted by: Mark2 | Aug 25 2019 7:31 utc | 104

trump isn't necessarily wrong on asking for decoupling (another word for sanctions), but it's the planning and the timing and the target. if anything USA should decouple from Europe and japan/korea.

how can you even attempt to negotiate with world's number one economy, when you have nothing of leverage to compromise with, fair or otherwise unfair. using media is one way i suppose. putting bases and stirring up trouble in the neighborhoods to try to stir up conflicts is not really the actions of a "strong" position.

as someone said earlier, get rid of the monopolies and two realize that Nothing china is doing... is unfair.. it is simply competition. just like saudi with its oil, canada with its oil sales to usa, mexico with it immigrant labor union to USA, if you can't compete, starting the trade war and decoupling with the wrong guys just to appease ur respect level, is the last thing you really want to do. so what?


1. get rid of facebook, amazon, apple, brown and root, mic related bidding circles
get rid of middle/upper management, get rid of subsidiaries of trash that were bought out and just held onto for no good reasons, auction off productive subsidiaries to competition, tax and seize non-taxable profits which are flowing out of US, break their stock holding benefits/trusts tax breaks which the banks hold secretly but written explicitly in quarterly meetings, make them invest in social securities pensions/healthcare if they don't want to be broken up

2. get rid of all military bases in hot zones (asian pivots, middle east, afghan, latin america, eastern europe) - the same could be said of the management as mentioned in number one
3. get rid of alliances with deficit running partners, i.e. japan/europe
4. invest in education and high speed rail by using the military for peacetime purposes, build the high speed rail to cross the dariens gap, open latin america to something better than Nafta
5. get the USD OPENLY on oil standard since it manufactures quite a bit now in order to stabilize prices and the logistics of the economy will prosper, get rid of saudi alliance as well
6. get rid of the service infrastructure industries it keeps on investing (hollywood, music, sports stadiums)*those are not leverages the world cares nor anything of value in negotiations
7. invest in China/India space programs and forget the nostalgia
8. invest heavily in mexico and latin america (non-bases)
9. invest heavily in OBOR and invest in Asian bank by china, if there is profit and interests being paid, and there are.
10. place MINIMUM tariffs on all countries for the majority of the goods to promote real trade COMPETITION
11. tax the upper 80% over 60% including all foreigners, minimize the tax on businesses
12. close borders but open business borders

decoupling from china and exactly where will investments come from? every country needs outside investments. so japan and europe are going to invest in USA infrastructure? i hope so. but to decouple and to invest with printed money even if it was infinite, is quite narrow like QE, since the domestic audience wouldn't know what to do with the money since only big monopolies and service industries are allowed.

the 12 points above is how USA can compete and negotiate with china, without even directly competing. throwing deplete uranium around while saying environmental awareness auto responses, currency manipulation when its own currency is tied to Saudi oil sales contracts, while accusing others of being unfair would serve better if one doesn't even open their mouths.

i guess when trade war fails, attempting to hold others to the barrel of the gun when militarily when even afghanistan is too much competition ..... that's not leverage, that's just suicide.

Posted by: jason | Aug 25 2019 7:34 utc | 105

Schmoe @24
”What foreign manufacturer of any product would rely on US components unless they were absolutely necessary?”

I would, and most industries do, solely for the reason that the US components are the best and most advanced on many segments, especially telecommunications and aviation segments that you mentioned. It is just not feasible for all nations to develop and manufacture at least all components they need. That is what the trade is for. For example, most of the European countries rely heavily on US components.

”Look at Huawei replacing US chips and maybe the Android OS...”, ”...and Russia removing US components from a new airliner...”, ”There is a large contract for an oil project in Iraq...”, ”...muddled reports as to whether Exxon might be entirely shut out.”

I see these as normal steps to any nation that wants to develop their competitive edge of their economies, and reduce dependency on other economies. To pull a conclusion that these actions are steps for some to de-couple from one reserve currency and join non-existent another seems quite a long walk.

”Anybody who thinks that the US is not paying a price for Trump's sanctions actions is delusional.”

My comment was about b’s discussion if others would de-couple from one currency for the benefit of some other currency. Certainly, I made no statement over the potential costs of sanctions, nor mentioned anything about Presidents.

Personally, on my numerous business trips to China, I have seen the sanctions having strong effect at least for electronics industry. Based on that limited experience, I would say that so far the sanctions seem to work as disadvantage of China. I have seen some segments loosing many companies in short time, and their entrepreneurs blaming the sanctions as the reason.

Posted by: Contributor | Aug 25 2019 7:44 utc | 106

i have to disagree on that strong effect for electronics industry or many segments are a negative for the long term.

the strongest effect was that it got rid of the non-efficient companies in china which made its living on border line profit margins, newly created companies without liquid assets, and of course affected some good companies which had potential but had no contacts/sales outside of the americas, were the ones most affected so far.

most of the companies/industries, which are thriving in the trade war environment, are the ones who have at least some sales outside of the USA. are there some heartbreaks? sure. if one over expended and borrowed too much from the banks, when times were good had to learn this lesson.

Posted by: jason | Aug 25 2019 8:00 utc | 107

If the current trade war is indeed an effort to decouple from China rather than aggressive negotiating about a more beneficial economical relationship, then how are US financial powers responding to this. If they are opposed where is the pushback?

Posted by: tuyzentfloot | Aug 25 2019 8:03 utc | 108

”I disagree with you. The USSR became a superpower in just 29 years -- and that because the imperial powers of the time tried to destroy it twice (Civil War 1917-1921; WWII, 1941-1945). Before that, it was a third rate, decadent, imperial power (for sure the weakest of the "big four", by far the poorest and most backwards). No other country has achieved that (the USA took 130 years to surpass the UK in industrial power, and 45 years more to become a world superpower)....”

”... So, I don't see why you associate communism as the antithesis of "progress" -- evidence clearly disproves you.”
vk@40

Communism has caused deaths of 100-110 million.

My home country and grandfather fought two wars against Stalin’s attempts to invade and get us under communist rule. My grandfather lost brothers in that war. These were the actions of the system that you call ”Superpower”. I have seen the state of that ”Superpower”. Nothing worked and people had no food. I have seen our neighboring Estonia taking over three decades to recover from the kiss of communism they got from USSR.

Please, go and travel in eastern Europe. Discuss with people about Communism and USSR. I am sure you will come back with much more knowledge about Communism than you have now.

Posted by: Contributor | Aug 25 2019 8:14 utc | 109

please please, this news topic is not pro china or anti china or pro democracy or pro communism.

it is tariffs on china from usa. you can be pro or anti all you like but i would like to stay on topic.

Posted by: jason | Aug 25 2019 8:17 utc | 110

I suspect the motivation for the "new Synthetic Hegemonic Currency (SHC)" is something along the lines of the following:

1) crypto-currency which makes any accounting for string-pulling manipulation by the elites truly impossible;

2) unlimited possibilities for covert money-printing with zero transparency;

3) guaranteed permanent unequal representation;

4) unlimited possibilities to force resource owners (eg Russia, Venezuela etc) to lose everything on dollars as they collapse to worthlessness, while the elite have privileged conversion of dollars to the new crypto dollar-front before the fall;

5) at the same time as (4), all undesired owners of cryptocurrency (eg Russia, China etc) can be covertly disinhertied by simple back-door programming;

6) unlimited control of the masses through crypto-financial universal surveillance and crypto-financial universal manipulation;

7) an opaque front for the replacement of the moribund dollar reserve currency by something equally hollow but unknown - and virtually unknowable;

8) providing the appearance of change without meaningful change.

The greatest theft in the history of Homo sapiens, if it ever comes about.


---


(By the way, I was quite sure Carney was from the USA not Canada. Maybe I am mis-remembering).

Posted by: BM | Aug 25 2019 8:18 utc | 111

The main takeaway for me in all this is that the capitalist USA is being surpassed by communist socialist country China in terms of economic output, global trade and technological advancement. Socialism works better than capitalism. This is why the USA has tried so very hard to strangle Cuba: it could not bear the embarrassment of a thriving, productive socialist island just off the Florida coast–so they put an economic blockade against rising Cuba in 1962, in effect right up to this day. It is worth mentioning that life in pre-socialist Cuba under Batista America's puppet dictator was misery, death squads, and squalor for 90% of the islands inhabitants except for the ruling families like the Bacardis, of rum fame. So now China another socialist country is rapidly rising and outperforming capitalist USA and of course America can't stand the thought of a multi-polar world where all countries co-exist and live in peace. It is ridiculous behavior for the USA to act as if it is entitled to dominate the rest of the world in its unipolar fantasy and dictate who can do business with whom, and sanction every country which doesn't follow its self-serving dictates. It's crazy: the USA wants to have a nuclear war with Russia and China because it can't have all of the world for itself and dictate to all other countries what they shall or shall not do on America's terms and conditions. Utterly ridiculous behavior. Hopefully the rest of the world will wise up and replace the dollar as the global reserve currency with some suitable alternative to limit American interference in global trade.

Posted by: Deschutes | Aug 25 2019 8:36 utc | 112

Thanks for the responses to my posting about the waste and corruption inherent in Chinese supply side investment strategies.

What no one comments on is how Chinese GDP is strengthened through debt fueled investment. How much unsustainable growth is a consequence of over building now for future consumption?

I am against Trump's trade war with China for the same reason I am against Brexit. Not because I am pro-globalisation but because both stem from a sense of nostalgia for worlds which no longer exist nor should their resurrection be allowed because the end result of re-flamed nationalism will inexorably lead to hot war among nations...something supposedly banished after the unprecedented destruction of WWII.

What is old shall be new again in the cyclical nature of being human, all too human.

Globalisation is here to stay despite the human tendency swing from hot to cold. China, for one, is the engine of most capitalist development this century and will continue along the global path, thus ensuring the hegemony of globalisation.

Fighting against this truth by attempting to de-couple from China is same as trying to tear yourselves away from your most intimate trading partners.

It simply cannot work. The notion itself is inaccroachable and absurd. The world cannot return to its failed tribal organisation for that road has proven disastrous and do we not see the ratcheting up of tensions as a harbinger of a return to former disasters?

The only realistic, positive solution is to fight the forces of globalisation, the multinational global elites, to deconstruct their bought and paid for political advantages locally within our own nations and replace with more income and wealth equality.

But the fight must be organised on the basis of class solidarity not national patriotism, on inclusion not exclusion, for the numbers and scale required to affect positive change for the non monied classes are vast.

Posted by: donkeytale | Aug 25 2019 8:51 utc | 113

Anyone connected with a Rothschild central bank would expectably favor a basket of debt-based currencies where a few nameless banking families get, in effect, rent off all the currency in existence, for nothing. Best to have the old-fashioned sort of money, boasted of as the American way by Benjamin Franklin, state-issued debt-free money spent into existence by the state, making possible doing away with income tax.

For trade settlement, best to base it on freely tradeable blockchain based gold depository receipts managed by the Shanghai gold exchange, with sub-depositories in the major financial centers and also in Moscow, Tehran and Caracas. I wonder what's taking the Chinese so long.

Posted by: sarz | Aug 25 2019 8:55 utc | 114

"The last time the Fed ran a too-low interest rate policy it caused the 2008 crash and a global depression."

I think that's arguable. The real problem there was that the banksters loaned out far too much credit in sub-prime mortgages, and got themselves (and their victims, their customers) into serious liquidity problems. The Fed's response was a reaction, not a cause. The reaction was to look after those too big to fail. Not the little people that pay their taxes.

Posted by: Ant. | Aug 25 2019 8:56 utc | 115

And let us not forget that lost under the extolling of Chinese virtue lies one inconvenient fact: wealth inequality is great and growing in China along similar demographic lines as in the also heinously unequal US.

And both gaps are expanding as we stand in the future shadow of a coming global meltdown propelled largely by the nationalist impulse to tear down something which can't possibly be rebuilt through nationalism.

Posted by: donkeytale | Aug 25 2019 9:08 utc | 116

PS to @113

I put it to Alasdair Macleod, an authority on gold trade, that the artificially low price of gold illegally manipulated by large Western banks with the connivance of Western governments could be readily stopped by the Chinese. The next time Western banks nakedly short more than a year's gold production in a few minutes, China could pick up the whole lot and demand delivery. Gold would go through the roof. Mr Macleod agreed that this was a possibility, but it would be an act of war.

Posted by: sarz | Aug 25 2019 9:09 utc | 117

Jason@106

”i have to disagree on that strong effect for electronics industry or many segments are a negative for the long term.”

Nothing to ”disagree”, as I wrote: ”I would say that so far the sanctions seem to work as disadvantage of China.” I did not say anything about long term.

I agree, the future will tell if sanctions will work on long term. However, unless the sanctions will continue, its already clear that they would not work. One could ask if they really are even meant to work? I dont have an answer for that.

”the strongest effect was that it got rid of the non-efficient companies in china which made its living on border line profit margins, newly created companies without liquid assets, and of course affected some good companies which had potential but had no contacts/sales outside of the americas, were the ones most affected so far.”

This is important point. The ”non-efficient companies” in China is not a margin call. Two decades ago China had strong competitive edge with extremely low labor cost. Now that edge has disappeared and most companies have turned ”non-efficient” relative to competitive edge against Western companies. The quality problems, delays, IPR risks, and utter incompetence were always there with Chinese companies, but they could be tolerated by foreign customers due to huge savings in labour costs. Now that the labour costs have risen to such extent that many operations are already cheaper to run by labour back in Europe, huge segment of the electronics industry in China turned ”non-efficient” already by the cost of labour. If one now adds the cost of quality problems, IPR risks, delays and comparative incompetence in R&D, many Chinese companies have turned from ”non-efficient” into useless.

This has nothing to do with US sanctions or even US or other countries as a customer. Many European companies have already moved their operations back to Europe only because it makes financial sense - or elsewhere like India.

China took too long to trust into their cheap labour and copying western innovations to build up the economy. They forgot that at the same time they should have educated masses of individually thinking brains instead of collective group thinking swarms of talent who rarely can operate alone at all without guidance.

CCP is scared of individually thinking creative innovators. Hence they never built that source. This is not something to fix in short term. Its a huge structural problem. Nothing to do with trade wars. However, a small moves in sanctions might just push many more companies into ”useless” as they already are in many cases deeply ”non-efficient”.

Yes, one can probably find many counter arguments with individual companies as an example, but based on my experience on the field, I would say that this observation sticks on broad terms for many important players out there. Certainly, I know this is the tendency with many companies I have had a chance to follow in China.

Posted by: Contributor | Aug 25 2019 9:11 utc | 118

1 of 12 points. get rid of facebook, amazon, apple, brown and root, mic related bidding circles get rid of middle/upper management, get rid of subsidiaries of trash that were bought out and just held onto for no good reasons, auction off productive subsidiaries to competition, tax and seize non-taxable profits which are flowing out of US, break their stock holding benefits/trusts tax breaks which the banks hold secretly but written explicitly in quarterly meetings, make them invest in social securities pensions/healthcare if they don't want to be broken up.. Jason @104 ..

YES, but how.. the powers with the wealth run everything. Until the 8 trillion human critters come together nothing of your suggestion is likely to happen. .. give us a plan to make the governed humanity of the world more powerful than the wealth and bankers that control the nation states and your ideas will probably find traction. No one has figured that challenge out.. I will say it again.. GIVE US A PLAN TO MAKE THE GOVERNED HUMANITY MORE POWERFUL THAN THE WEALTH AND BANKERS THAT CONTROL THE NATION STATES. In other words the power that is behind the nation state must by an awaken governed humanity.

The problem is a few (control the top echelons of the nation states and that control puts the Nation states into a wealth controlled set of polarized Groups Group A vs Group B, the nation states have become the global mafia.. .
wealthy want the nations states to line up the humans they govern make them fight for what the wealth want, and Trump is doing just that ) .

Posted by: snake | Aug 25 2019 9:30 utc | 119

@19 antiUSA. Bingo! Got it in one...

Posted by: Beibdnn. | Aug 25 2019 9:55 utc | 120

VK@32

This left us with China. Why didn't China go down in 2008? The answer is equally simple: because it is not capitalist. Needless to say, Cuba and North Korea were also left unscathed by the 2008 meltdown.

Not true, China is a capitalist country but one run by the (theoretical) Communist Party. You might say it's a Keynesian state insofar as it's capitalism 'moderated' by the state but not one without its contradictions as its economy is totally dependent (for now at least) on the US and the EU.

I surmise that the CCP theorised that building socialism in a capitalist world was an impossibility and thus decided to develop its economy using capitalist methods but run/controlled, totally by the state. Call it state capitalism if you like and herein lies China's own contradictions, which are now manifesting themselves. But China is NOT an imperialist state.

I think it's the scale of China's economy that's the kicker. With 4 times the population of the US and having unleashed the power of industrial capitalism to produce, everything, and do it in a way that uncontrolled imperialist capitalism can't, inevitably it came into conflict with the US. Is it the means justifying the end or the end justifying the means? Same old story really.

Posted by: Barovsky | Aug 25 2019 10:25 utc | 121

Barovsky -
Well stated with one glaring exception.

China is indeed an imperialist economy. What leads you to believe it is not?

Posted by: donkeytale | Aug 25 2019 10:48 utc | 122

China is indeed an imperialist economy. What leads you to believe it is not?

Posted by: donkeytale | Aug 25 2019 10:48 utc | 121

Is China an expansionist state bent on conquering other countries? Does it have 100s of military bases around the world? Does it invade and occupy sovereign states? Does it practice sanctions and blockades against countries opposed to it? Does it use its economic and military power to subdue/neutralise its competitors?

No doubt you'll mention Tibet but China considers Tibet part of China, and this still doesn't make it an imperialist state. But I'm not in the business of defending China's internal policies and actions, I'll leave that to the Chinese people themselves.

Posted by: Barovsky | Aug 25 2019 11:06 utc | 123

@115

And let us not forget that lost under the extolling of Chinese virtue lies one inconvenient fact: wealth inequality is great and growing in China along similar demographic lines as in the also heinously unequal US.

Donkeytale: This is simply NOT TRUE. Tens of millions of Chinese people, formally living subsistance existence, have seen their lives substantially improved. See

China has the world's fastest growth in living standards

http://www.china.org.cn/opinion/2013-10/24/content_30391004.htm

Posted by: Barovsky | Aug 25 2019 11:24 utc | 124

Certainly it is all playing out as we did expect or should have expected.

In theory there was a choice between accepting China as a player in a multipolar world or fighting to prevent that. In practice the US is incapable of accepting a multipolar world. That is as true of Obama as Trump, the only difference is that Obama wasted 8 years of pre-emption opportunities, Trump wasted just 2.

To avoid damage other countries have no choice but to decouple themselves from the U.S.

Should decouple yes. Will decouple no. I think the whole EU will follow the US line. Unhappily in some cases, but none are brave enough to challenge it. All talk about independent lines on Nordstream II or Iran should be seen as complaining about the inevitable, not as a genuine refusal to comply. Watch Huawei get ditched now.

The US (and its NSA sources) has tremendous influence over EU politicians.
Europe is not even the question. The question is how Asia splits: Japan, SK, India Pakistan.

Posted by: Michael Droy | Aug 25 2019 11:38 utc | 125

Came across this on the Saker and thought it worth posting this extract:

Political unrealisability turned them into utopia. After all, communism is also quite good in theory; the trouble was that society cannot exist on its principles. The presence of even the most truncated commodity-monetary relations in a socialist society constantly generates capitalism and kills communist goals and methods. Well, and of course, the quality of human material played a role back then and it plays its role also now – mankind is not yet ready for socialism. - 'What does Putin’s staffing decision vis-à-vis Glazyev mean' http://thesaker.is/what-does-putins-staffing-decision-vis-a-vis-glazyev-mean/

It shows what an expert 'juggler' Putin is as he balances all the conflicting forces operating in Russian society. But where's the Left??? Where is it anywhere?

The article may seem totally divorced from our reality but I think not. It shows a society that far from rejecting its 'socialist' past, has actually learnt a great deal from the experience and it connects organically to the developments in China.

Posted by: Barovsky | Aug 25 2019 11:55 utc | 126

Trade wars, siege wars, hot wars - all are distractions. What is the real game? We keep hearing that this or that extreme outcome wouldn't be in anyone's interest. Well, I can see that it wouldn't be in my interest or your interest or in the interest of anyone we know, but how can we say what the elites are interested in if we don't even admit that there are elites pulling strings behind the scenes? Anyone who wants to talk about such things is instantly labeled a Crazy Conspiracy Kook and packed off, or at least slagged off. Manufactured crisis after manufactured crisis. What is it really about?

Posted by: paul | Aug 25 2019 12:08 utc | 127

Michael Droy @124

I'm not sure about the EU, and Germany in particular, always following the US line. Russia and China are both huge markets for cars, planes, etc., and Russia is of course a key source of energy for Germany. Here is an interesting article re: German sentiment to China v. the US. Germans trust China more than the US, survey finds

Contributor @105

"I see these as normal steps to any nation that wants to develop their competitive edge of their economies, and reduce dependency on other economies. To pull a conclusion that these actions are steps for some to de-couple from one reserve currency and join non-existent another seems quite a long walk."

Nowhere did I say that such steps were directly based on an attempt to decouple from a reserve currency and I mentioned that secondary sanctions are still a problem if US components are not used and the company will sell its products internationally. I was just saying that any company that uses US components when designing a new product now, unless absolutely necessary for cost or quality reasons, is idiotic. I do however believe that the Iraq project potentially excluding Exxon is based on reserve currency concerns because one of the parties bidding on the same contract would be compensated under a barter system with oil as payment.

Posted by: Schmoe | Aug 25 2019 12:11 utc | 128

Based on your post history and your constant reference to official US narrative of things , i know you are a troll @nemesiscalling and @contributor.

the way you posts and the content of your posts exposed yourself.

im sure you got sockpuppet accounts here too

Posted by: milomilo | Aug 25 2019 12:23 utc | 129

I was glad to see a number of responses to this article that put the issue of ‘de-coupling’ in a more realistic light. I agree that the US had to do ‘something’. The current situation with China was just not sustainable. I think China recognizes this as well. What is the point of sending more and more real goods to the US stacking up more and more US dollars in the Fed’s computer? Granted, China is using those dollars to buy things, although not from the US. That is another reason why China does not want to flood the World with dollars by dumping their holdings. That would just make their dollars less valuable. But even that game has a limit.

There has been so much worship of ‘trade’ over the last few decades that people don’t seem to realize that the US (and Russia as well) do not need ‘trade’ at all. The US was very prosperous when trade was about 5% of the economy. Some trade is good, but as pointed out by others self-reliance is good as well. I also agree that the benefits of US financial dominance have gone ... to US financial elites. In fact, the driving force for ‘outsourcing’ was always Wall Street. In that sense, Trump really is a patriot as opposed to the traitors running the large banks.

Maybe there are better ways to bring about this de-coupling than the tariffs. I understand about sending the production to Vietnam, etc., but at some point it will also make some sense to simply build some factories in the US. They may not have any workers in them (due to automation), but that is still a good thing. Contrary to all the reports the US still has an industrial base, and rebuilding it, is not going to be impossible.

Of course on the other side of this competition, the military side, it is all bad news. There is no way that risking a nuclear war is a good policy for anyone and that is exactly the direction of US policy. You can hand the enemies of Trump a lot of credit for that, with their insane, dishonest, and despicable ‘Russia-gate’ hoax.

Posted by: SteveK9 | Aug 25 2019 12:37 utc | 130

Posted by: Contributor | Aug 25 2019 9:11 utc | 117

first, of course, you didn't say long term, but we must look at all angles, if we must look into the future to see if the sanctions will work. and of course, i am stating the position now, and i may be wrong later, that even if the sanctions continue or stop tomorrow, they will fail more so for US than china mid-long term and most likely short term as well.

yes i agree, it really isn't all a margin call, it is a bankruptcy call, a surrender of the company because once one's profit margin after tax was 20-30% and the sanctions go over 30% you are in the negative. not every company can move wherever business is better for them if every product you make or ship out is a loss. people rather go bankrupt unless they have cash reserves and more importantly, a plan b, which consist of covering their sales to USA with sales to say anywhere else, the world is a big place, yet they chose the wrong place, a lot of companies should fail when they are propped up, it is a good thing.

two decades ago, China was making the best copies of Aks with the best steel both stamped and forged, but of course in other industries where cutting the corners are allowed (businesses-market strategies), surely their partners from abroad are in on the take as well no? the quality you speak of, IPR, and incompetence is with any market and to be expected unless one plays themselves as fools. so every restaurant/company that opens in USA or europe will succeed 5-10yrs later? failure is almost a given in any country, we could say quality, IPR risks, and incompetence is everywhere. unless you don't even open any companies and restaurants in that case, quality would inevitably suffer under monopolies without competition.

if these companies are moving back to europe and india, which is all right if the models working previously are not working now, but wouldn't you say to move to china in the first place was incompetence and inefficiency, if not utter uselessness? i wouldn't... because it's business, people make good decisions at the time which turn out to be bad decisions, such things i would never call as incompetence or put them down as labor cost increases unforeseen. they are just planned mistakes, experiences, which no one expected unless they expected china to be forever what they imagined.

so, these technology companies are high cost/high expense/research endeavors. they are high cost investments and high employment salaries. of course the quality better match the costs or else they should go bankrupt as well.

i don't wish to go into creative innovators vs conventional stability because it is not about sanctions. can you give me some examples of innovation and creative geniuses from the last two decades? but i will tie it back to sanctions in one moment, i will give one to support your notion and of course there are anecdotes to everything but things like hughes toolings for horizontal oil drilling and pressurized deep water drilling sludge mixture ratios and aviation engines but China is in space. i will say this though, china wanted to be in the international space station program, they were "sanctioned" "decoupled", and now look what happened ......... they didn't have to innovate everything, they might as well just buy the rocket from NASA and rocket themselves. and just how many 7/12/14/16nm companies do you know or are following that are sitting on the edge of technology production, mass production?

Posted by: jason | Aug 25 2019 12:49 utc | 131

Barovsky @125 and previous: Yes, that's the way I see it too, getting people to really serve the common interest and stay that way requires some ingenuity. We are REALLY big apes, who, once we solve the problems of water, food, a comfortable place to sleep, etc. turn out to be just obsessed with sex (lots and lots of sex) and social status ("there can be only one!" kind of social status, domination). I support my argument by pointing out the behavior of our US ruling elites, who seem to think of little else besides boinking as many female status markers as possible and accumulating as much notional "wealth" as possible, and likewise point out the historical record of "elites" who commonly go for the harems and gold toilets first and last once they make it to the top.

So if the commies have learned that lesson, and are working on how to manage that problem, I think that is a good thing.

Putin, like all good managers, never deals in personalities, precisely to avoid all the monkey politics - who's got the biggest dick - unless forced to, and then you better watch out. He is like the anti-Trump, the un-Trump.

Posted by: Bemildred | Aug 25 2019 12:50 utc | 132

@SteveK9

In fact, the driving force for ‘outsourcing’ was always Wall Street. In that sense, Trump really is a patriot as opposed to the traitors running the large banks.

Outsourcing as you call it, is all about lowering the cost of production. Before exporting production to Asia, the US was 'exporting' production South, to states like South Carolina, Alabama and so forth. Non-unionised states, with high unemployment. Then onwards and southwards to Mexico, El Salvador. The global revolution in communications changed the equation, making long distance supply chains economically feasible, hence the move to Asia. Yes, of course 'Wall Street' is involved but the driving force is still lowering the cost of production.

That doing so, has all kinds of contradictions obviously escaped the notice of the 'captains' of industry. Here, in the UK, many 'captains' did notice but did nothing. It got so bad that manufacturers no longer had to skills to replace the ones lost to countries like India for example, exported to train Indian manufacturers but without replacing them at home.

Is capitalism shortsighted, thinking only of immediate profits? Is the Pope a Catholic?

Posted by: Barovsky | Aug 25 2019 13:17 utc | 133

Why is it that US sanctions, and Donald Trump's tweets, seem only to help Chinese and Russian elites deepen their own domestic economic and political control?

Russia has the problem of needing to re industrialize and reduce dependence on oil. Carefully targeted sanctions seem to be built for that role.

China has an overcapacity problem and needs to reduce dependence on US consumers. Carefully targeted sanctions seem to be built for that role.

For all the talk of trade wars and decoupling, the global economy is remarkably stable. Isn't that curious after all we hear about the fragility of the global economy? The stock market, as ever, is completely irrelevant except as a means of extracting wealth from the masses and exerting control.

What is decoupling are not large economies, which continue deepening their integration with every passing day, but the coverage of news from reality.

The process of Globalization is accelerating in all directions and unsurprisingly, the very rich and powerful keep getting richer and more powerful, in all corners of the world.

Could it be that Globalists envision the future will be exactly like the past? Isn't it they who declared that history is over?

Does not this suggest they have no real plan for the future after all, except that it should look something like the present?

Recall the three Empires from Orwell's 1984: Eastasia, Eurasia and Oceania. Wars were always conducted by 2 against 1.

If one were trying to save Capitalism, or Socialism for that matter, what could be better than having each generation destroy alternating parts of their own and enemy territory, while the regions formerly on the front lines of the previous war with a previous ally are given an opportunity to rebuild.

Only war can save Capitalism, and if Socialism is just more efficient Capitalism at War, perhaps globalizing elites have hit upon a strategy to save both themselves and the system under which they continue to thrive; essentially as described by George Orwell in his book 1984.

The real war, as ever, is by the top against the middle and bottom.

What Utopian fools think Capitalist-Sociopaths, even when they call themselves Socialists, would envision a new system in which the very means by which they both obtain and maintain their power, would be replaced by pie in the sky and God knows what else?

Posted by: C I eh? | Aug 25 2019 13:49 utc | 134

psychohistorian @76 observed "The noise to signal ratio on this thread is skewed to the noise side....I wonder why?"

Some of the noise is State Department/Atlantic Council astroturf or their groupies. Some, however, are just national chauvinists starting to come face-to-face with the impossibility of escaping their own economic trap and are reacting by clinging ever more tightly to their delusions of exceptionalism.

vk has provided up-thread some hard-nosed, reality-based analysis of the trap capitalism finds itself in. There is only one way to have market forces re-industrialize America and that is to end the US$ status as global reserve currency. That will decimate living standards in the US, though, and completely wipe out the consumer basis of the US economy... and I do mean completely. Some of the upper-middle class neoliberals in their comfy suburban McMansions whose loyalty the empire has rewarded with quality of life far above the actual economic value of their labors are starting to realize the true costs of re-industrialization, and that cost includes their lifestyles.

How quickly can America re-industrialize? Know that what has to happen before that re-industrialization is for the US$ to come home from abroad. Once the dam bursts that will happen fast as countries try to out-compete each other to see who can dump their dollars first while they still have value. Looking at the practical implications of that, when the hyperinflation drives your Starbucks latte up to $70, how many will you buy each week? Not so many, and as a result America's service sector will radically contract. Naturally, that is a necessary precondition for re-industrialization as you need to free up that workforce for factory employment, but how long will it take for The Market™ (hallowed be Its name) to recognize those tattoo-sleeved, nose-ringed, mountain-panda-gendered, narcissistically identity-fixated former "baristas" as a valuable industrial labor resource to exploit?

Not overnight, I can assure you. Not even in a generation. Some of the upper-middle class neoliberals in their comfy suburban McMansions whose loyalty the empire has rewarded with quality of life far above the actual economic value of their labors are coming to the realization that even with cost of labor decimated by hyperinflation, America still will not be an attractive place to invest for industrial production. Ignore the quality of the labor force and consider just one simple factor: transportation infrastructure. The American labor force is de-urbanized; geographically spread out and dependent upon personal transportation to get to work. After about 5000% inflation has occurred to make American labor more attractive to investment, how much of that labor will be able to afford cars and fuel? Even at three times the salary, Chinese workers, with their work ethic, education, reliable public transportation, and state provided healthcare will still be a better deal.

A metaphor: The American economy is like a morbidly obese individual on the gurney in the Intensive Care Unit, plugged into numerous external support devices to keep its body from decomposing. Trump expects that body to leap off the gurney and run (and win!) a marathon. That's a fine fantasy for the individual on the gurney to maintain until the life support machinery starts getting decoupled. When time for do-or-die approaches, people begin to realize that "die" is the only option that they can reach, so they make noise to drown out the signal.

Maybe decoupling can happen, but Americans dramatically underestimate what a nightmare that will be for the US population, and when they start seeing hints of it most will retreat further into denial and be like [fingers in ears] "Nah, nah, nah!! I can't hear you!"

Posted by: William Gruff | Aug 25 2019 13:54 utc | 135

@101 jackrabbit

Yes, that link is important . It lays things out so I got a better understanding of the history of neoliberalism and how it, not the US war machine is really at the crux of what we are discussing when talking about what is driving the world itself towards calamity.

I don't think b was optimistic in his piece for the west. He always addresses strategies by Trump and others by saying, "They won't work."

But I am not expecting America to act and successfully safeguard its supremacy. Globalism was always a get rich quick scheme, or rather the furthest reaches of unregulated transnational capitalism, and, as such is not built to last. Just as Marx thought the advent of socialism was embedded in the DNA of capitalism, itself, globalism has to and will fail. The coming crash ensures that change is coming. How could it not, jr?

Posted by: NemesisCalling | Aug 25 2019 13:56 utc | 136

@ Posted by: Contributor | Aug 25 2019 8:14 utc | 109

Well, I'll gladly travel to the Baltics to see the "damage" "communism" (the USSR called itself socialist, but ok) has done to your country. But then I invite you to travel to Latin America and Subsaaran Africa to see the damages capitalism has done and continues to do.

And your "100-110 million" figure is absurd. We've already discussed this topic many times in this blog, so I'll not repeat the argumentation here. Long story short: if we're to use the same methodology to capitalism, then capitalism killed billions.


@ Posted by: donkeytale | Aug 25 2019 8:51 utc | 113

There're two fundamental differences between Chinese and the other countries' debt:

1) Chinese debt is, as you state, leveraged on real things (infrastructure), which have a very good "multiplier" effect (so it's not a Ponzi scheme);

2) Chinese debt is domestic, i.e. the Chinese government owes to itself. In other words, it can pay its debt back in Renminbi, not in USD (it makes all the difference in the world). Recent calculations (I have to dig up for the article) estimates China can do it if all its debts went belly up, so it's not at full meltdown levels yet.


@ Posted by: Contributor | Aug 25 2019 9:11 utc | 118

Well, if you're blaming China for copying technology from the West, then you'll have to blame Taiwan, South Korea and Japan first: they all literally built their post-war industry on copied Western technology. Japanese vaunted cameras (Nikon and Canon), for example, were literally born by copy-paste German Leica. Taiwan was an even more extreme case: the USA gave them the conductor IP for free in order for them to industrialize and develop so as for them to serve as propaganda against the socialist in the Mainland. Idem South Korea (against North Korea).

China is not "afraid" of innovation. Innovation is barely done anywhere in the world because it's hard.

China is already #2 in patents (if I'm not mistaken, it has already surpassed the USA last year), and they are at the forefront of 5G.


@ Posted by: Barovsky | Aug 25 2019 10:25 utc | 121

I disagree with you that China is capitalist. Yes, there is capital in China, but capital is not the dominant mode of social reproduction there.

And what the hell does "Keynesian State" means? As I've discussed previously here, Keynes didn't invent the concept of government spending, nor the concept of lowering interest. Since in China the government is the main owner of the means of production, the concept of "government spending" doesn't even make sense.

We must be careful to apply a capitalist doctine (Keynes') to a socialist country. Otherwise, we'll commit anachronisms.


@ Posted by: donkeytale | Aug 25 2019 10:48 utc | 122

China is not an imperialist country. An empire expands parasitically to other territories, and permanently intereferes, directly, with these territories foreign and domestic policies. China is merely doing trade.

The elites of the adjacent countries and the USA may use the imperialist rhetoric in order to try to whip their masses to fight for their own interests, but calling a country imperialist doesn't make it imperialist.

@ Posted by: Barovsky | Aug 25 2019 11:55 utc | 126

This is normal. I understand why Eastern Europe abhors "communism". No system is born ready in the world.

Capitalism failed spectacularly in Portugal and Spain before working out in England. Even when it worked out in England, it took a new space -- the USA -- for it to manifest itself in its most pure form. All in all, it took capitalism more than 500 years to "work itself out". It was a painful process, with experiments and failures.

The USSR has a historical importance to us because it was the first concrete experiment of a socialist society. It proved it was possible. Now, the torch is in the hands of the Chinese. Since we know that socialism cannot work in the long term without being worldwide, we know the torch won't stop at the hands of the Chinese (and the Chinese know it, hence the BRI/OBOR).

History is not linear, but more like a maze.

Posted by: vk | Aug 25 2019 14:48 utc | 137

William Gruff | Aug 25 2019 13:54 utc | 135

William Gruff, you have pretty much nailed it.

However, the U.S. dollar will not fall until it loses its reserve currency status. When it does, and the U.S. is forced to borrow to cover its balance of payments deficit in a currency that is not its own, then it will drop dramatically. The Fed will have no option but to cover the massive U.S. government deficits by QE Unlimited.

The U.S. elites (and their global counterparts) who have their fortunes tied to U.S. paper will see their fortunes essentially wiped out. For the middle class and below, who have no savings, employment in manufacturing at inflated dollars will provide them with a larger share of the economy than they have now. This will be the beginning of the process of reversing the income gap between rich and poor that has blown out over the past 4 decades.

I agree with you that re-industrializing the U.S. will not happen over night. It took 4 decades to de-industrialize, and it will take at least as long to re-industrialize. And in the end the U.S. will never again achieve its status as the uncontested world leader. At best, it will be a regional power providing a decent standard of living for its population. At worst, it will revert to developing nation status.

Posted by: dh-mtl | Aug 25 2019 15:04 utc | 138

Gruff @ 135

What you describe @ 135 would result from the laws of capitalism and what you illustrate tobgue in cheek as the "cure" (runaway inflation destroying the current economy along with the value of the USD as reserve currency) is also the very reason why the US will never "re-industrialise."

For one thing, China will continue to do everything in their power to not allow this to happen, as destruction of the US economy is not in their interest in any way whatsoever. Who will buy the stuff they export to the US if US consumers can no longer afford? Even if Keynes's favoured neutral reserve currency also favoured by teh Chinese elites were implemented it still would not be in China's interest (or the rest of the globalised world fro that matter) to see hyper inflation in the US or any major economy.

Besides all that, the entire discussion surrounding "re-industrialisation" is futile and fantastical, an exercise in talking for the sake of talking.

The way of the future is to "de-industrialise" the world's work force using high technology, AI, robots to draticall reduce if not eliminate the need for workers. As this trend continues China's bosses also will reach a crossroads: continue to compete in high tech manufacturing by eliminating workers or see the multinationals move their production to other locations which were able to fully automate more cheaply. At that point we will start to determine whether the CPC is actually socialist. For the vast working class will be in need of a safety net, one which by the way is largely non-existent today in "socialist" China.

Posted by: donkeytale | Aug 25 2019 15:05 utc | 139

William Gruff says:

Maybe decoupling can happen, but Americans dramatically underestimate what a nightmare that will be for the US population, and when they start seeing hints of it most will retreat further into denial and be like [fingers in ears] "Nah, nah, nah!! I can't hear you!"

well, there's always prayer, and god knows how much Americans like to pray. so, from super power to cargo cult...

A cargo cult is a belief system among members of a relatively undeveloped society in which adherents practice superstitious rituals hoping to bring modern goods supplied by a more technologically advanced society

…...

...cue scene on deserted mainstreet where disoriented campers fall silent straining their ears towards what sounds like an approaching airplane…

Posted by: john | Aug 25 2019 15:13 utc | 140

Nice to have the US screem out in pain on every move. Their all-out attack on Russia (89 ff) faled miserably, with China jumping to Russias rescue and launching a huuuge counter attack. The monomanic moment of the US turns out to be a major source of entertainment for the rest of the world. Go China gogogo..

Posted by: cog dissonance | Aug 25 2019 15:15 utc | 141

Barovsky @ 124

Donkeytale: This is simply NOT TRUE. Tens of millions of Chinese people, formally living subsistance existence, have seen their lives substantially improved

Actually, there is no correlation between wealth inequality and growth in living standards.

More than two decades of spectacular economic growth in China have raised incomes dramatically and lifted millions of people out of poverty. But growth hasn’t benefited all segments of the population equally. In fact, China has moved from being moderately unequal in 1990 to being one of the world’s most unequal countries.

The Chart of the Week tells the story. It shows that the Gini coefficient, a widely used measure of income inequality, has risen by 15 points since 1990 to 50 (a reading of zero would indicate that everyone has the same income, while a reading of 100 would mean that the richest person gets all the income.)

That is a big change, even though some increase in inequality could have been expected as the level of development improved.

What accounts for the jump? Differences in education are one important driver of inequality, according to a recent IMF working paper. Rapid technological change and industrialization have boosted demand, and therefore incomes, for highly skilled workers. Differences in incomes between urban and rural areas another major factor. Educational attainment is lower in rural areas, and China’s hukou system of household registration limits migration to urban areas, where wages are higher.

(And before the usual house trolls come out of the woodwork to attack the source of this information, please realise before you stick your foot in your mouth that China is a member of the IMF and the World Bank. They have borrowed from these institutions in the billions).

The inequality data, if anything, may be understated due to the immensity and fast developing nature of the Chinese economy. Some independent economists have calculated the gini coefficient at 60....

Posted by: donkeytale | Aug 25 2019 15:22 utc | 142

Barovsky and vk - re: Chinese imperialism

Of course China is imperialist. The mere fact they opened up their country for imperialist exploitation in the first place means they are willing participants in globalisation, which by its very nature depends upon economic imperialism to enrich the monied elites of all nations, a growing number of whom not only are Chinese but also members of the ruling political party.

Then, at the expense of hearing once again (ad nauseum) from you and other true believers about its noble raison d etre, the BRI is in fact as pure an exercise in economic imperialism as you will ever find.

And while it is true saying China is imperialist doesn't make it so, the converse is also equally as true.

Posted by: donkeytale | Aug 25 2019 15:33 utc | 143

to all, especially vk, thank you for such interesting commentary. to Julianna, very interesting point. Possibly accounts for some of the miss-ogeny in the western xian rodeo. to b, kudos. regarding Carney and the trial balloon of a crypto-currency to take over the world: there already has been an experiment in India financed by Bill Gates (why????) and Visa, to force Indians into a cashless government controlled "banking" system. Scary and initially a disaster. I'm not sure of the current status.

Posted by: Miss Lacy | Aug 25 2019 15:39 utc | 144

Another point to make (once again, ad nauseum) to the rhetorical tricksters ammong us is that "Trump" does not equal "the US".

The people of the US do not support "decoupling" from China. As with all of his stupid, recherche du temps perdu policies, a solid and growing majourity of Amerikkkans are against Trump's tariff wars with China.

More Americans than ever support free trade with other major countries, according to a new survey, which comes amid President Trump’s ongoing spat with China over his protectionist policies.

Nearly two-thirds of Americans, or 64 percent — a new high — back free trade because they believe it’s good for the economy and say the country can’t avoid continued globalization, according to the poll by NBC News and The Wall Street Journal.

“While Trump plays a game of chicken on tariffs, a record number of Americans believe that free trade is good,” said Jeff Horwitt, the Democratic half of the bipartisan poll.

Americans’ opposition to free trade has collapsed over the past two years, falling from 37 percent in 2017 to just 27 percent in the latest survey, figures show.

Posted by: donkeytale | Aug 25 2019 15:53 utc | 145

@ vk | Aug 25 2019 14:48 utc | 137

I disagree with you that China is capitalist. Yes, there is capital in China, but capital is not the dominant mode of social reproduction there.

China not capitalist? Just because the state directs how private (and public) capital is invested, doesn’t make it a socialist economy, anymore than the UK nationalising the railways, coal and so on, after WWII, didn’t make the UK a socialist state. In fact, the state saved capitalism from itself. At the same time, nationalisations, the NHS, took the wind out of the sails of the real demands for a real socialist economy by the organised working class and left parties. It’s here you see the role of the Cold War and anti-communism playing a parallel role in the preservation of capitalism.

I suppose you could argue that what China has done is save China from itself and the West.

The major force that’s propelled China to (almost) the numero uno capitalist state is precisely how it’s been integrated into the world economy. Yes, the state directs how private, and public investment takes place but it does it in the context of a capitalist economy, just as Keynes wanted to do.

And what the hell does "Keynesian State" means? As I've discussed previously here, Keynes didn't invent the concept of government spending, nor the concept of lowering interest. Since in China the government is the main owner of the means of production, the concept of "government spending" doesn't even make sense.

Exactly what Keynes meant it to mean: the state directing how capitalism worked, with the state determining investment in major infrastructure, creating demand and so forth. It’s not rocket science and even though in neo-liberal states, there’s no room for Keynes today (at least publicly), in China Keynesian economics is probably the best analogy we have for describing the trajectory of China’s development. Believe me, if China really was a socialist state, do think the leading imperialist states would be doing business with it? I don’t think so.

However, I can only guess at China’s long term vision but I surmise that it saw the application of capitalist production methods (just as the Soviet Union did in its early days) as the best method of developing the economy (where socialist development failed miserably because the largely capitalist world didn’t want to see it succeed). Locked out of global markets, denied the technology it needed to develop (just as the USSR was), eventually it either transformed its economy or died the death of the imperialist onslaught.

In the meantime, the crisis of the Earth’s ecology has added a new dimension to development, hence China’s goal of creating an ‘Ecological Civilisation’. After all, look at the damage so-called socialist industrial development did to China’s environment. Until recently they were hellbent on duplicating the destruction of the natural environment that has happened in capitalist states.

I think your conflating two things; China has become a major competitor to the US and a block to US/Western capital’s penetration of China’s economy. Anti-communism is a convenient tool, just as it’s been directed at Russia, once the objective of pauperising Russia was halted by Putin. And there are a number of parallels between the China and Russia that bear looking at: the role of the state in directing investment, especially the defence industries.

The major enemy in all this, is imperialism, as distinct from capitalism, though of course, getting rid of capitalism itself is still the longterm goal of us socialists.

Posted by: Barovsky | Aug 25 2019 16:32 utc | 146

vk @ 137

1) Chinese debt is, as you state, leveraged on real things (infrastructure), which have a very good "multiplier" effect (so it's not a Ponzi scheme);

2) Chinese debt is domestic, i.e. the Chinese government owes to itself. In other words, it can pay its debt back in Renminbi, not in USD (it makes all the difference in the world). Recent calculations (I have to dig up for the article) estimates China can do it if all its debts went belly up, so it's not at full meltdown levels yet.

1) Leveraging on insfrastructure may have a very good multiplier effect, or it may simply be an accounting trick to prop up the income statement at the expense of the balance sheet.

Meantime, more importantly, we hear very little or nothing at all about the Chinese elitest investors, the achitects, the developers (IE, same profession as Trump), the Construction behemoths who create all the leveraged infrastructure. I'm guessing they siphon off their billions in profits now, or do you supposed the far seeing government makes them wait to turn their profits until the infrastructure begins to pay off at some unknown future point in time?

2) the Chinese government takes on relatively little direct debt exposure, which is smart and in contradistinction to the ways of the west, where the burdens fall directly onto the tax payers and consumers. China instead pushes debt out onto the corporations and the people through the banks, three of which recently required state intervention (sound familiar?), the first time the PBOC has been required to bail-out banks in two decades.

China bears have long warned of a day of reckoning after a debt-fuelled boom stoked a pell-mell property and infrastructure boom that paid little heed to returns. During the halcyon days of double-digit growth, bankers could play the game of "pretend and extend" by extending loan maturities, but a new reality has dawned as growth has slowed and Beijing has moved to contain the risks of excessive debt accumulation in Australia's largest trading partner.

There is concern the bailout of HengFeng Bank, which followed rescues of Baosheng Bank (in late May) and Jinzhou Bank (in late July), could be the first among many more bailouts to come.

[emphasis mine as it relates directly to this our dialogue]

Total Chinese debt now stands at record breathtaking >300% of GDP. Only Japan among major nations has a larger percentage of total debt to GDP. And recall that Japan was China before China...and now is but a mere shadow of its former self from those heady boom times during the 1980s...when everyone (I'm sure Trump included) lived in fear that Japan was going to purchase all US assets and control the country.

The moral of the story: Capitalism works everywhere during the boom times and seems failproof...until it stops working due to over exuberance, overly optimistic market psychology and unbounded greed.

China is not immune to the laws of capitalism.

Posted by: donkeytale | Aug 25 2019 16:38 utc | 147

Barovsky @ 146

Once again I must commend you on a very excellent comment. I went down this path with vk recently too who seems to be in total denial, especially wrt Keynes and China. In a sense, as we see with the debt fuelled hyper investment in "infrastructure", aka investment in ghost cities decades before they will be needed (if they ever are needed), China practices a politically motivated super-Keynesianism to an absurd degree, which only state planned economy will allow, for better or for worse. This in particular, is superb:

However, I can only guess at China’s long term vision but I surmise that it saw the application of capitalist production methods (just as the Soviet Union did in its early days) as the best method of developing the economy (where socialist development failed miserably because the largely capitalist world didn’t want to see it succeed). Locked out of global markets, denied the technology it needed to develop (just as the USSR was), eventually it either transformed its economy or died the death of the imperialist onslaught.

Posted by: donkeytale | Aug 25 2019 16:57 utc | 148

donkeytale | Aug 25 2019 16:57 utc | 148

Thank you. I/we await VK's response.

Posted by: Barovsky | Aug 25 2019 17:01 utc | 149

donkeytale | Aug 25 2019 16:57 utc | 148

PS: It's a pity the Soviet Union didn't see the same writing on the wall. BTW, this piece on Gorbachev particularly relevant.

http://ericwalberg.com/index.php?option=com_content&view=article&id=750:gorbachevs-legacy-russias-911-or-let-a-hundred-weeds-bloom&catid=37:russia-and-ex-soviet-union-english&Itemid=90

B

Posted by: Barovsky | Aug 25 2019 17:04 utc | 150

I just read a posting on ZH that says that the US Fed increased its holding of Treasuries by 8 billion this past week.

QE is dead....long live QE

Posted by: psychohistorian | Aug 25 2019 17:06 utc | 151

@ Posted by: Barovsky | Aug 25 2019 16:32 utc | 146

China doesn't direct the economy. It owns it. Monumental difference.

That's why western European social-democracy ultimately failed: it believed socialism's role was just to be capitalist's "voice of conscience". Well, once the crises begun to castigate capitalism after 1975, this voice was unceremoniously ignored, keynesianism being discarded like an used condom.

That's also why Trump's "decoupling" plan will fail: the USA is a capitalist economy, so the private sector must enjoy absolute freedom of investment. He can't order shit.

@ Posted by: donkeytale | Aug 25 2019 16:57 utc | 148

Keynes is not the mastermind behind post-1978 China.

First, there's no evidence the CCP uses Keynes' doctrine. It's post-1978 policies resemble Lenin's NEP much more.

Second, Keynes' doctrine cannot even be applied to socialist China, because there the State literally owns the strategic means of production. There's no concept government spending because the government is, at the same time, investor. Keynes' thesis is that the role of the government is to entice the "animal spirits" of the capitalists to invest more, through fiscal and monetary policies. China can do that, but it can also directly control production because it owns them. That aspect is not only not keynesian, but anti-keynesian.

Posted by: vk | Aug 25 2019 17:12 utc | 152

Puzzeling how nobody here is talking about what I might call the Kissinger Doctrine v2. B perfectly described it in Helsinki Talks - How Trump Tries To Rebalance The Global Triangle
Trump is executing Kissinger policy.
There is a Kissinger Doctrine from 1975

It appeared first in relation to the Allende Government of Chile. In that context the doctrine could be stated as follows: The United States is entitled to conspire against another country's constitutional government if we fear it might slip that country out of our orbit.

Posted by: Joost | Aug 25 2019 17:17 utc | 153

Joost you may have missed it but the topic of Kissinger doctrine has been well chewed over here, including by jackrabbit among other high volume posters.

Posted by: donkeytale | Aug 25 2019 17:24 utc | 154

VK@152

'China doesn't direct the economy. It owns it. Monumental difference.'

What does this mean, China owns China?

The state and private capital 'owns' China and the state directs how capital is invested, both public and private, exactly as Keynes described it. You obviously don't like the name Keynes, fine, come up with a new name but it'll mean the same thing. The real issue is, how long can this arrangement last? Sooner or later, over-production, falling rates of profit will overtake China, then what?

Posted by: Barovsky | Aug 25 2019 17:28 utc | 155

'Keynes is not the mastermind behind post-1978 China.'

Whoever said it was? You're playing fast and lose with words VK. What I am sure of, is just like Keynes' attempt to make capitalism work, the CCP went through the same process; how do we develop without becoming a vassal state of Imperialism? I think they've managed quite well so far. I don't know why you're so worked up about Keynes and the CCP using capitalism, surely it's the pragmatism of the CCP at work, drawing on a range of techniques but in a new situation, so what's the problem?

Posted by: Barovsky | Aug 25 2019 17:34 utc | 156

...
regarding Carney and the trial balloon of a crypto-currency to take over the world: there already has been an experiment in India financed by Bill Gates (why????) and Visa, to force Indians into a cashless government controlled "banking" system. Scary and initially a disaster. I'm not sure of the current status.
Posted by: Miss Lacy | Aug 25 2019 15:39 utc | 144

Talking about cashless society, Oz's Scum Mo Neolib govt is cooking up some new financial regulations and laws to encourage consumers to adopt cashless payments AND outlawing cash transactions greater than $10,000au. His excuse is a determination to "crack down on money-laundering" (cough cough).

However, a pro-sovereignty splinter political party called Citizens Electoral Council (CEC) which has a weekly TV broadcast on Ch31 (delayed by 7 days), is vehemently opposed to these changes for several reasons; the 2 most important of which are...

1. The Report recommending the changes was commissioned by the Scum Mo govt and prepared by one Michael Anderson A.O. who reached the top echelon at KPMG. CEC believe that KPMG, E & Y, PWC, and Deloittes are in cahoots with major banks and other fraudsters and are facilitators of large-scale money laundering projects.

2. The aim of the new regulations and laws is to force consumers into the Official banking system to facilitate universal adoption of non-cash payment methods. CEC's objection to this is that there are no Public Banks in Oz and ALL of the big private banks and financial institutions were were found, by the recent Royal Commission, to be running fraudulent investment and insurance schemes and cannot be trusted.

Posted by: Hoarsewhisperer | Aug 25 2019 17:40 utc | 157

@111 bm... born in canada - triple passports though.. my understanding he grew up in canada - courtenay b.c. perhaps?

https://en.wikipedia.org/wiki/Mark_Carney

@135 wg... good add on post to vks... thanks.

Posted by: james | Aug 25 2019 17:40 utc | 158

wiki says edmonton...

Posted by: james | Aug 25 2019 17:41 utc | 159

What no one comments on is how Chinese GDP is strengthened through debt fueled investment. How much unsustainable growth is a consequence of over building now for future consumption?

Posted by: donkeytale | Aug 25 2019 8:51 utc | 113

donkeytale, China is not overbuildong. There will be a lot more building in China.

China actually has large rural population, some 41 %, as opposed to 10 - 20 % in developed countries. In 2010 it was half of the population. China is undergoing massive urbanisation as it is becoming a developed country, and new cities need to be built. Something that happened earlier in history in many countries, for example the US. China's current level of urbanisation is similar to the US in the 1940s. You can see right now China as the US in the 1940s, with its urbanisation and industrialisation. This process will take some time, at least 20 more years, and will power growth ahead into the future. So people will be hearing a lot more about newer and newer ghost cities without having an idea what is going on, which is basically the largest national urbanisation in human history.

So hundreds of millions will be moving into cities.

Surprisingly enough, some 40 % of China's population also lack internet connectivity, as opposed to 10-20 % in developed countries. This means again lots of growth into the future, as additional hundreds of millions will be plugged into the internet.

So China will grow well for another 20 years no matter what.

Posted by: Passer by | Aug 25 2019 18:35 utc | 160

Posted by: Passer by | Aug 25 2019 18:35 utc | 160

"There will be a lot more building in China..... new cities need to be built.....China will grow well for another 20 years no matter what."

Yes, because fossil fuels are infinite, and the biodiversity of the Earth is infinite and can be exterminated forever, and the ecology's capacity to be devastated is infinite, and the Earth can be murdered forever. And all for the sake of the cancerous "growth" of the lowest vermin ever, materialistic Homo necropolis.

By now there really is almost nothing left of humanity but psychopaths like this scribbler. Gaia will not mourn this species, soon to become the apex victim of its own mass extinction campaign.

Posted by: Russ | Aug 25 2019 18:54 utc | 161

Posted by: Contributor | Aug 25 2019 9:11 utc | 118

How do you explain that China dominates the 5G sector, mobile payments, the world's ship building, the world's Tunnel Boring Machine market (Denmark and Italy just bought several machines), has the largest high speed train network in the planet, accounts for 50 of high quality science (take US as base 100 and the EU as 80), with that share catching up fast, and soon to be at EU level, is the world leader in venture capital, leads in AI patents and is an AI powerhouse, etc?

In particular, what do you think about this?

“The leader of 5G stands to gain hundreds of billions of dollars in revenue over the next decade, with widespread job creation across the wireless technology sector,” the Defense Innovation Board, a group of American business leaders and academics, stated in a report for the US Department of Defense.

“The country that owns 5G will own many of these innovations and set the standards for the rest of the world,” it added.“That country is currently not likely to be the United States.”

https://www.asiatimes.com/2019/07/article/us-is-losing-the-5g-war-to-china/

Posted by: Passer by | Aug 25 2019 19:03 utc | 162

Posted by: Russ | Aug 25 2019 18:54 utc | 161

So, you're saying that the Chinese people have no right to development? Keep those, non-consuming peasants, non-consuming. Do they not deserve the same basic infrastructure we all have? Oh, I forgot, that's only for Westerners.

Posted by: Barovsky | Aug 25 2019 19:09 utc | 163

Posted by: Russ | Aug 25 2019 18:54 utc | 161

I hear such comments mostly from people from developed and rich countries. Ok, but what gives only western countries the right to have high living standards and development? You can lead by example, by backing down to 15 000 $ per capita GDP (average world level) from the current 50 000 $. Become several times poorer and go back to villages, remove lots of infrastructure, etc. In such a case, i would agree that China too should not develop and stay as it is.

Posted by: Passer by | Aug 25 2019 19:10 utc | 164

It's not me saying that destruction, or what psychopaths like you call "development", has gone way too far. I'm afraid it's the Earth saying it. And Gaia will insist on payment of all your bills.

And stop lying. All your "infrastructure" was raped from the Earth and from peoples who never wanted any part of your vile Christian-scientistic "Dominion". Including most people in the West itself.

And the most open, obvious "secret" is that it was all for nothing. Modern civilized grinders are the least happy, healthy, whole people who ever have existed. Including and especially the rich. Otherwise why are they such psychopaths who never can reach a point of relaxation and enjoyment of their wealth, but on the contrary must obsess ever more frantically on getting more, and especially on making sure that most people get less and less and less?

And the same dynamic goes for all your Western grinders, at any level of the hierarchy.

And that's the Hell you call "heaven" which you wish on everyone.

Thank Gaia that Earth can't and won't tolerate this abomination much longer.

Don't speak to me, speak to the thermometer.

Posted by: Russ | Aug 25 2019 19:32 utc | 165

@ Posted by: Barovsky | Aug 25 2019 17:28 utc | 155

Just because something is Statized (i.e. property of the State) doesn't mean it is socialist.

Statized property and investment is essential for the survival of capitalism. They are required when capitalists are in a Mexican standoff: when either the property would result in an exorbitant advantage to whoever owns it, or when it is so monumental in scale and cost that the private sector will never pick it up. Hence roads, railways, universal basic education usually being obligation if the State in capitalist nations.

The necessity of statized property vanishes gradually when capitalism becomes fully matured, when collective ownership of caputal becomes viable (i.e. stock market). That's why commodities are sold by their prices of production, not their exact value, as Marx demonstrated in book III.

In China, the State is not a capitalist state, but a socialist one. It is fruit of the dictatorship of the proletariat (which, in China's specific case is an allianve between workers abd peasants).

So, yes, Keynes' theory is not appliable to socialist China at all.

Either way, Keynes failed in saving capitalism from itself: after the oil crisis of 1974, a process of stagflation begun. According to his theory, stagflation was impossible in the caputalist system. Hence the death of the Keynesian Consensus and the rise of neoliberalism.

Posted by: vk | Aug 25 2019 19:35 utc | 166

Sorry, I forgot to include the main proximate point: The same goes for all who ape Western civilization, including all who want to drive globalization, and all who drive infinite cancer, aka "growth".

Posted by: Russ | Aug 25 2019 19:41 utc | 167

Posted by: Russ | Aug 25 2019 19:41 utc | 167

I think you were already told what you neeeded to be told. I do not agree with rich people telling poor people what to do. Lead by example, go back to per capita GDP 15 000 $ (world average), go back to villages, and then i would agree that poor countries should stay the way they are too.

===================================

Who will buy the stuff they export to the US if US consumers can no longer afford?

Posted by: donkeytale | Aug 25 2019 15:05 utc | 139

Guys, you really need to update yourself with newer info, this isn't 2006 anymore.

China is no longer export focused economy. It is mostly driven by internal consumption. Way less dependent on trade than the EU and approaching US levels. It is already the world's largest consumer market.

https://www.zerohedge.com/s3/files/inline-images/china%20relience%20on%20exports.jpg?itok=bjxXbBog

Posted by: Passer by | Aug 25 2019 20:07 utc | 168

lol. it's pretty amusing to see our resident economic acolytes aping the grand poobahs of macroeconomic theory...who were all savvy enough to ignore the palpable negative externalities in meatspace, like environmental collapse and social upheaval, the consequences of which are, apparently, beyond contemplation.

Posted by: john | Aug 25 2019 20:36 utc | 169

@snake
the methods toward breaking up the monopolies is indeed an everest of a problem. it takes a whole lot of carrots and wielding a heavy stick on those who are using political schemes to rewrite laws. Amazon. the best way is to find, support, and fund politicians who spell out their plans not just promises, and see to it, to carry it out, like i believed ross perot would have done.

USA doesn't need a dictator to accomplish this. hillary and all contenders from bush 1 on down have always been the kind that always play lawyer speak games. they have never put out a plan of anything but rely on emotional aspects of human nature. politicians who NEVER includes nothing of a plan and can never stand at a position and say geez i was fucking wrong. Obama what change? for better for worse? what was his plan on this change? Make america great again? how so and starting with a wall? afghanistan still there?

to the other person, america needed to do something. Yes it did, it needed to get rid of alliances of deficit running countries and saudi arabia, not get rid of trade and start sanctioning china. many think China is japan but in reality, they are making the same mistakes they did with russia when putin came to power who was open to western support.

i am thinking trump is doing this trade war in hopes that others will want to negotiate in terms to his favor. but the stakes are higher, this is not a deal with n korea.

Posted by: jason | Aug 25 2019 21:20 utc | 170

@100
>Estonia
>recovering

Only if you call slavishly removing what industry you inherited from the USSR(as usual for periphery, all russian-built and operated, lol) on EU orders "recovery", hehe. Each and every country-sized failure in butthurt belt is doomed at the hands of oh so benevolent german overlords, which will happily hollow out their returning serf pseudostates.

You will beg Russians to come back quite soon. Russian belevolence is very large, but they have their limit too, and your shit has maxed it. Enjoy your terminal depopulation.

Posted by: URGH | Aug 25 2019 21:43 utc | 171

@168 passer by

Surely you don't believe your own garbage? Then why all this hooplah if this wasn't going to create massive ripples in global economy?

Are you saying this is all theater and who cares? Ok, fine. Let's test your theory and pull the trigger. Give these wrestling fans like myself something to chew on and decouple. Obviously, China will be fine.

Come on! Let's do this.

Posted by: NemesisCalling | Aug 25 2019 21:47 utc | 172

@ john 169

Yup, it's all the same scum, all the same idiocy, all the same crimes, all the same delusions.

Posted by: Russ | Aug 25 2019 22:18 utc | 173

@ Posted by: NemesisCalling | Aug 25 2019 21:47 utc | 172

The explanation is very simple: Trump is just the symptom, not the cause, of this general capitalist crisis. If the trade war/"decoupling" does trigger another recession, it will be "just" that: the trigger. The same way it wasn't the fault of some random sheiks in Arabia that the 1974-5 oil crisis happened: the "Keynesian Consensus" capitalism was already in a very frail state -- that it died through an oil price shock was just an accident of History. It's the same logic with a very old person: it can die of flu, it can die of cancer, it can die in its sleep, it can die of a heart attack etc. etc. because it is already frail -- but those can only be the drop that breaks the dike, not the only cause.

I doubt total decoupling will ever happen:

1) the USA is a capitalist society. If one rogue POTUS force its capitalist class to invest elsewhere that is not China, then we would have less, not more, capitalism. Besides, the very principle of sociometabolic reproduction of any capitalist country is that the private sector must be, collectivelly, more powerful than the State; it would, therefore, be counterintuitive to imagine a single public servant -- in this case, a POTUS -- to be able to whip the entire capitalist class in a socialist fashion in the USA.

2) transferring factories and other infrastructure in space is hard, take a very long time and is very costly. There's a reason strikes work: the costs for the capitalist to give in to the workers' demands are invariably lesser than the costs he would have closing the entire plant, taking the loss in the books and build another one in another city -- let alone another country. This would require not only the infrastructure per se, but also brand new licenses, new land, new round of negotiations with the new government (municipal, state, national) and training of a brand new workforce. That's one of the reasons why, historically, manufacturing workers are the most successful in the class struggle (being the main actor of the most important of them all, the Russian Revolution of October 1917).

Factories are being outsourced from China to India, Vietnam et al at least two decades from now. In this meantime, China's average wage grew four-fold (i.e. became more expensive). Even then, it is still able to create more than 1 million jobs per month in the urban areas alone and is still, by far, the largest industrial power. The thing is that it's not all about how cheap the workforce is, but how good is the governance of the country and how good is the overall infrastructure this country offers to the businessmen. That's one of the reasons China is China, and India is Brazil (even though both have 1.4 billion people).

Posted by: vk | Aug 25 2019 22:25 utc | 174

Posted by: NemesisCalling | Aug 25 2019 21:47 utc | 172

Yes, dear Nemesis, China is no longer that dependent on exports. Its not garbage, this is what the data shows.

Why the hoopla? First, this trade war is about the whole world, and not just about China. Trump is threatening a trade war with the EU as well, including autotarrifs, put tarrifs on the whole world's steel and aluminum production, put tarrifs on India, on Turkey, attacked trade with Iran, threatens Mexico and Vietnam, there are threats against developing countries status in the WTO, threats to exit the WTO, newer sanctions on Russia, threats to sanction companies involved in Nord Stream 2, etc. It is about a lot more than China. And the uncertainty about who and what will be next is having a negative impact as well. Most companies right now complain not so much about the actual trade war related issues, but about the uncertainty it causes.

Second, this trade war happens to coincide with a crisis incoming, a recession for 2020 was predicted even back then in 2017 and 2018. A trade war coinciding with the recession is going to exaggerate the recession. And i'm pretty sure that Trump is in a bad mood because of this. Because he will be the one who will be blamed for all of that sh.tshow.

Posted by: Passer by | Aug 25 2019 23:25 utc | 175

@174 vk

That's a lot of verbage when you just could have said it was going to be hard.

Vk, god bless you, but you spend a hell of a lot of time telling people such as myself that I can't believe my eyes. Either that or that it would be too hard.

Well, boo-frekin hoo.

And because of people like myself who skip the bullshit, you will probably dismiss this and just say, well, you don't understand.

But you don't understand.

You don't understand the human need to not be under the thumb of such a system as ours. You parse your numbers, articles, and theory, but you can't open your eyes to the fact that something needs to be done in the West. Transnational globalism has reached its zenith and it is a brick wall. And retracing our steps might mean the death throes of the liberalized world order that you may or may not know you have been defending.

This goes far beyond the triumph of socialism over capitalism. This is entering into the sphere of human freedom and what we in the West used to refer to as liberty. We want it back and the path leads through decoupling.

You can't convince me otherwise.

But go ahead and try me and which will further prove that you do not see the untenable foundations of our present condition.

Posted by: Nemesiscalling | Aug 25 2019 23:27 utc | 176

Vk, forgive the terse tone of my reply.

I respect and am thankful for your contributions and knowledge on the subject.

Posted by: Nemesiscalling | Aug 25 2019 23:32 utc | 177

Hoarsewhisperer | Aug 25 2019 4:32 utc | 97--

As Scott Adams wrote in today's Dilbert:

"Wally: I decided to try my hand at writing fiction.

"I like writing fiction because it doesn't require any research.

"I can literally make up a story out of nothing!

"I feel sorry for nonfiction writers. They have to get the facts right.

"But a fiction writer only has to use his imagination.

"I can make any wild assumptions about the future that I want!

"Pointy Headed Manager: I asked you here to talk about your budget forecast.

"Wally: That's what I was talking about."

IMO, we should interpret Today's Dilbert as a confession by Adams that he doesn't have a clue as to what he writes about. As he notes, he doesn't have to be empirical about anything and can freely write whatever he wants as he's a writer of FICTION.

Posted by: karlof1 | Aug 25 2019 23:52 utc | 178

William Gruff @135--

Agreed. In my writings, I've called for the building of resilient economies with the ability to be sustainable over time--Many Centuries worth of Time. And for such to properly function, laying the requisite infrastructure is critical. Recall my posting some weeks back about China's highspeed rail network and Pepe Escobar's constant promotion of same. I don't know if you've watched any of the Living or Walking Dead series or read the comic book versions; but what I see being portrayed isn't the "Zombie Apocalypse;" rather, I see that term being used as cover for the economic collapse of the USA and the resulting massive conflict and destabilization. No, the parallel between what's portrayed in the show and what might be reality differs, but the overall lines of what happens to individuals and society as a whole is close enough. Currently after half a generation of time, some semblance of morally based cooperation is reforming. (My partner is hooked on it; I mostly listen and observe how the script writers manipulate the characters.)

As for Trump's attempted diktat, it'll be assaulted by an infinite number of lawsuits, his attempt to decouple the Outlaw US Empire's corporations from China will fail, and he'll lose in 2020. IMO, he took the easy way out of his predicament as POTUS. Given the current National Defense Doctrine, whoever wins in 2020--it won't be Trump, he won't be renominated--will have a difficult row-to-hoe.

Posted by: karlof1 | Aug 26 2019 1:03 utc | 179

neme 82

*Trump is calling for reasserting America as the global superpower that it perhaps thought it once was. In doing so, he is addressing the need to challenge the technological ascendency of China and thus shining a light onto what China truly is and that this avatar embodies something fundmentally imcompatible with the west.*

tsk tsk tsk..
pray tell, what might those western 'values' that China is found woefully wanting ?

Posted by: denk | Aug 26 2019 2:38 utc | 180

I've called out pft's B.S. many times before,

There isnt any fukus agitprop on China that he doesnt like...
'presecution of xtians, UIghurs, FLG.....social credit polic state blah blah,
you name it.

He talks about the 'fake conflict' bet fukus/China and yet......

He support the trade war on China. !

pft/neme are almost verbatim in their meme,

Its no wonder that pft is neme's idol !

Or perhaps they'r simply the two sides of the same 'coin' ?

Posted by: denk | Aug 26 2019 2:46 utc | 181

vk - I concur with Nemesis @ 177. You are squishy on some aspects and fall back on an uncharacteristically vapid response when logic deserts you but your thoughts are otherwise consistently interesting.

I guess I can't require perfection from you...I'm only about 99.3% perfect myself...

Posted by: donkeytale | Aug 26 2019 2:49 utc | 182

@180 denk

Are you saying, Monseiur, that there is no difference btw the West and East and that a Chinaman understands the thinking and mentality of an American and vice versa?

If that is the case, than Globalism has reached its desired outcome and that everyone in the world is exactly the same in their thirst for Coca-Cola and skinny jeans.

If that isn't true, than you haven't read my post correctly enough to understand that by incompatible, I don't mean lacking, I mean incompatible. And thank God there is some shred of difference left alive in this world where everyone seems hell bent on spreading their enlightenment and whatnot.

Grow up, too, with your silly ad hominems about me being pft's twink. Lol. If anything, he's my twink.

Posted by: Nemesiscalling | Aug 26 2019 2:59 utc | 183

vk and Barovsky - thanks for the trialogue on this thread.

Now I suppose because vk insists that China has ignored Keynes I will need to look up the educational and professional background of the leading Chinese economists to see what business school they attended. If they didn't all earn degrees at Mao State Penitentiary during the Cultural Revolution my guess is they all will have more than a passing acquaintance with Keynes.

Posted by: donkeytale | Aug 26 2019 3:00 utc | 184

passer by - your comments aren't out of line but they are a bit too glib. I'm actually not too concerned with the future of these investments but what's happening in the present:

Meantime, more importantly, we hear very little or nothing at all about the Chinese elitest investors, the achitects, the developers (IE, same profession as Trump), the Construction behemoths who create all the leveraged infrastructure. I'm guessing they siphon off their billions in profits now, or do you supposed the far seeing government makes them wait to turn their profits until the infrastructure begins to pay off at some unknown future point in time?

Any thoughts?

Posted by: donkeytale | Aug 26 2019 3:03 utc | 185

@180 denk

I have already tried to address the differences and what makes the West the West and East, East in various posts throughout my time here.

A lot of my thinking stems from the writing of Edith Hamilton and especially her book, "The Greek Way."

Throwing off Tyrants is essentially a western trait and it has been since the expulsion of those deemed unwanted by voting in Ancient Greece.

On the other side of the world you have dynasties and God-men. Caesar is of course another God-man, but I have already addressed vk with this by saying that Rome was more eastern than western.

In a sense, you have a people that are predisposed to dynastic-rule (and that is perhaps why a Hillary Presidency was such a fucking bummer).

I have also said that Russians and Chinese have an insanely admirable knack for shoveling shit, staying in their lanes, and respecting their family. This includes being subjected to the greatest catch-up in developing industry and commerce in China in 50 years the likes of which the world has never seen.

Kudos to them.

But as a westerner, I like the West, and it seems to me that the outdated motif being peddled around here, namely that the US is a war-crazed monster is prohibiting many westerners such as yourself from seeing what side you truly belong to and, as a result, are sitting across the pitch in the visitor stands and are cheering on the opposing team. Sad really.

Posted by: Nemesiscalling | Aug 26 2019 3:16 utc | 186

neme 183
*Are you saying, Monseiur, that there is no difference btw the West and East and that a Chinaman understands the thinking and mentality of an American and vice versa?*

For the life of me, never understand how some
'elected leader of the world's oldest democracy' could proudly declare...
'We cheat, we lie and we stole' as if its
a badge of honor !

Who's say this ?
'East is east,west is west, the two shall
never meet'
hehehehhe

Posted by: denk | Aug 26 2019 3:19 utc | 187

vk, NemesisCalling, donkeytale

It's not really a macro economic issue. It's a market structure issue. China regulates to protect their economy and society from foreign domination. That is incompatible with free trade but was allowed to continue as long as the Empire thought that they would eventually isolate China and force it's submission.

But they failed to bring Russia into the Western orbit. In fact, they alienated Russia with their "economic shock therapy" that took a terrible human toll.

And they showed the world a glimpse of what the New World Order would be like via (among other things): rendition and torture, color revolutions, rampant looting (global financial crisis), and apartheid for Palestinians.

Many of us in the West fervently believe that Western traditions are the best foundation for global governance. But the "elites" that rule us pay lip service to those traditions as they make a mockery of them. We are ALL suffer as a result. And that suffering is likely to get worse before it gets better.

Posted by: Jackrabbit | Aug 26 2019 3:32 utc | 188

Nemesiscalling 186

Not long since the peasant revolts in both Russia and China. A lot of countries have had one or more revolutions in the last few hundred years. The english speaking world... the yanks had one a few hundred years back but the rest of five eyes still swears allegiance to the monarch of England.
Seems like it us willing to shovel shit.

Posted by: Peter AU 1 | Aug 26 2019 3:36 utc | 189

jackrabbit - Trump wants Russia included in the Euro mainstream. And you know what?

I agree with Trump.

Posted by: donkeytale | Aug 26 2019 3:44 utc | 190

jackrabbit @ 188

Many of us in the West fervently believe that Western traditions are the best foundation for global governance.

Ironically enough although I very much appreciate your honesty and ths will shock many of the dogmatics, I don't agree with you on this! Lol.

Posted by: donkeytale | Aug 26 2019 3:48 utc | 191

vk @ 71:

It doesn't matter because that won't change the factories' profit rates. What makes capitalism prosper is high profit rates, not the country where it is made. And, now, profit rates are very low: in fact, financialisation is a symptom of low profit rates in the "real" economy. Capitalists move to very creative financial products not because they love them, but because they need them.

They do that because profit rates will secularly fall in the capitalist system. The more it develops, the less it will profit relatively to its own size in the long term; that's Marx's greatest discovery.

Truth.

Posted by: donkeytale | Aug 26 2019 4:02 utc | 192

vk @ 166

In China, the State is not a capitalist state, but a socialist one. It is fruit of the dictatorship of the proletariat (which, in China's specific case is an allianve between workers abd peasants).

No, the success of China is the fruits of capitalism governed capitalistically by a government formed by the dictatorship of the proletariat.

Posted by: donkeytale | Aug 26 2019 4:19 utc | 193

Posted by: karlof1 | Aug 25 2019 23:52 utc | 178
(Scott Adams' confession)

I'm not surprised. He's not an idiot. Once he'd calmed down he'd have realised that his rant was concocted under the black cloud of untimely death. That sort of stuff leaves a scar.

Posted by: Hoarsewhisperer | Aug 26 2019 4:24 utc | 194

@194 hw

Nah, I think that's a stretch.

The Wally character in the strip is known for resenting his position as underling to his inferior and moronic bosses.

He is constantly making digs at their lack of awareness. What Wally is alluding to in the strip is the boss' willingness to accept whatever Wally produces as gospel.

Scott Adams is a known AGW skeptic. My guess is that he is referring to alarmists and their 10-year prophecies going back the last 40 years.

He just recently referenced the Michael Mann defamation case where the author of the hockey stick warming effect sued another guy for questioning his theory and was asked to present his data by the defendent's team so they can parse it and see if the "defamation" was merely addressing the truth of the matter. Michael Mann denied access to that data.

Posted by: NemesisCalling | Aug 26 2019 4:35 utc | 195

Dilbert comments--

I don't think Adams's "commentary" is associated with the Climate Crisis whatsoever. Recall Wally was promoted to be the manager's useful idiot prior to Sunday's piece. It's about the budget is the one important fact aside form its fantasticalness.

Posted by: karlof1 | Aug 26 2019 5:39 utc | 196

Was it Marx or dinkeytale who remarked:

Capital finds its own freedom.

Posted by: donkeytale | Aug 26 2019 6:06 utc | 197

> U.S. Decoupling From China Forces Others To Decouple From U.S.

...which should be THE purpose. Controlled demolition of US foreign trade before it uncontrollably collapsed with USD

Posted by: Arioch | Aug 26 2019 9:05 utc | 198

In my opinion you have to get to root cause of all these, the fact is that US need a major overhaul. It is not just one thing that is wrong, it is many things that have to be fixed. The current political system has proven to be totally dysfunctional. Unfortunately no one can say anything about it, because the only thing that works in this country, is its system of suppression. We need fixes from poverty to social economic discrimination, from basic rights to right to have a clean and healthy political system that does not allow lobbyist to overrule the will of majority for their gain.

Unfortunately, I do not know how this can happened, with people having their heads in the sand. If we want a bright future for our great county, we should not look at the distractions that every new administration brings about, because at the end of the day everything remains the same and even worse. When do we want to realize that we the people can bring the change by raising the issues and talking loud so that in the mist of all the distractions our voice is heard.

Posted by: Jmore | Aug 26 2019 14:06 utc | 199

William Gruff 135
*Some of the noise is State Department/Atlantic Council astroturf or their groupies. Some, however, are just national chauvinists starting to come face-to-face with the impossibility of escaping their own economic trap and are reacting by clinging ever more tightly to their delusions of exceptionalism*

As stated many times before, fukus is mounting a economic blitzkrieg on China.

The war on HUawei/ZTE , DJI...etc etc has nothing to do with 'national security' ,how could a Huawei network in Nepal pose a 'security threat' to the [[[five liars]]],
so that fukus had to arm twist the Nepalese to ditch Huawei for an murikkan 'recommended' firm [sic] ?

So its all about good ole protectionism ?

In fact something larger is at work.
For example, fukus werent bidding for port and energy proj in Bangladesh, yet it see fit
to bludgeon Dhaka to ditch Chinese contractors for INdian and jp competitors. !

See,. It doesnt matter if murkkan companies had no dog in the fight...so long as Chinese firms are denied access its mission accomplished for fukus !
IOW, fukus is mounting a
global 'Chinese exclusion act' no less, on Chinese companies, especially the high tech sector

It even resort to terrorism in Afpak, Africa etc to sabotage Chinese investments in railway and energy !

The parallel escalation of tariffs are designed to trigger a flight of foreign investments outta of China, even tho its unlikely that murikkan firms would move back to US, it is immaterial, the purpose is to bleed Chinese industries to death.

If fukus gets its way, China cave in to murkkan dictat or its economy is clobbered, we can say bye bye to so-called multipolar world, long live Pax murikkana !

So who'd support this trade blitzkrieg on China ?
Sock puppets or misguided rednecks !

Posted by: denk | Aug 26 2019 15:14 utc | 200

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