China

[Luke]

Its all right in front of our eyes but you wont find those kind of news on CNBC.

 

So I am here, loading up with shares of one of the biggest and technologically advanced businesses in one of the biggest and most important markets on this planet and let geopolitics play itself. 

Edited September 4, 2023 by Luca

[Luke]

"China, of course, sees this plainly. “The attacks on China mirror exactly what the United States has been doing,” said Zhao Lijian, a spokesman for the country’s foreign ministry. Zhao argued that the U.S. “has no respect for the international order underpinned by the UN Charter and international law” and is a “saboteur of the international order” because it “wantonly withdraws from treaties and organizations,” placing “its domestic law above international law and international rules.” In pointing out that the U.S., with its long history of illegal violence, is almost always at war, Zhao concluded:"

“In the eyes of the United States, international rules must be subordinate to and serve its interests. When international rules happen to be consistent with U.S. interests, they are cited as authority. Otherwise they are simply ignored.”

 

"Is the Chinese position here incorrect? Is it unjust? In fact, it is difficult to see how anyone could argue with it. George W. Bush, when warned that some of his planned retaliation for the 9/11 attacks could be illegal, replied “I don’t care what the international lawyers say, we are going to kick some ass.” The United States freely violates treaties when it pleases, and when the International Court of Justice ruled that the United States had acted unlawfully in supporting the Nicaraguan contras, the U.S. simply refused to recognize the Court’s jurisdiction and blocked enforcement of the judgment. The United States has indicated that if the International Criminal Court should ever try to put an American on trial for the kinds of crimes that we now demand Vladimir Putin be indicted for, we would be willing to invade the Hague if necessary to halt the prosecution. Anything to ensure that we are not subject to the same rules as everybody else."

[Luke]

 

Regarding Taiwan: 

 

 

"But what about Taiwan? Surely here is an instance in which China is posing a serious threat—not to us directly, but to the principle of self-determination. In recent years, China’s rhetoric about reunifying Taiwan with China has become increasingly bellicose, and there are ominous signs that as China’s military capacity grows, so does the risk that it will go to war to subsume Taiwan. Lyle Goldstein notes the increasing prevalence of rhetoric out of China that “The PLA [People’s Liberation Army, the Chinese military] has the will and capability to ensure national unification.” A PLA video quotes a Chinese navy captain saying: “We have the determination and ability to mount a painful direct attack against any invaders who would wreck unification of the motherland, and would show no mercy.” (Goldstein says that not taking these threats seriously is “reckless beyond belief.”)

 

The situation is a serious one. But to understand it and try to respond sensibly, we have first to refresh ourselves on some basic history. Taiwan was part of China for hundreds of years, before being ceded to Japan in 1911. Before and during World War II, Japan used Taiwan as a military base, its “unsinkable aircraft carrier.” In 1945, Japan surrendered Taiwan to the Republic of China (ROC), although there was controversy over its sovereignty for some years afterwards. When the People’s Republic of China (PRC) defeated the ROC in the Chinese civil war in 1949, Chiang Kai-shek’s ROC forces retreated to Taiwan and set up a government in exile. For the next decades, both the PRC and the ROC claimed to be the legitimate government of all of China, both the mainland and Taiwan, and during the ‘60s and ‘70s, Chiang’s government in Taiwan was still planning to reinvade the mainland. The United States long endorsed the position that Taiwan was part of China, and only ceased to recognize Taiwan as the legitimate government of all China when it became clear that the PRC was not going away. In recent decades, Taiwan itself has seen a diminution in residents who identify as Chinese rather than Taiwanese, and an increased sense of the island as its own nation rather than the Republic of China. (In fact, Taiwanese officials used to dislike the country being referred to as Taiwan, because it implied it was a separate nation rather than the legitimate Chinese government. Taiwan has long competed in the Olympics under the name “Chinese Taipei,” in part because the Republic of China government argued that its sovereignty was not confined to Taiwan.)

 

It is easy to portray the conflict over Taiwan today simply as the story of a large aggressor wanting to dominate a small neighbor. But the history makes the story more complicated. In the aftermath of a civil war, if the defeated party retreats to a small part of the country, it is predictable that a complicated sovereignty dispute will arise. There is no obvious U.S. analogy to help us understand. We would have to imagine that the losing side in our own civil war had retreated to Galveston or Key West and claimed to be the legitimate government for the whole country, before eventually shifting to a more realistic position of desiring autonomy. It is not only easy to see how a generations-long conflict over sovereignty could arise in such a situation, but also easy to see how, if a large foreign power armed and supported the government-in-exile, and threatened to go to war to preserve independence of the smaller state, the prospects for an amicable resolution of the sovereignty dispute could be diminished.

 

Over time, Taiwan has clearly gone from being a disputed part of China to a nation of its own that deserves the right of self-determination. But when we look at the situation from the PRC’s perspective, we can see why certain U.S. actions in support of Taiwan may actually be counterproductive. First, we can understand why the PRC views Taiwan as part of China, and might consider reunification important—Taiwan has been a part of China before, and Taiwan has been used by both Japan and the ROC to wage or plot war against the mainland. The United States, then, should tread lightly, because the more the PRC associates the cause of Taiwanese independence with the U.S. strategy to encircle China with hostile countries to maintain U.S. power in the region, the more determined the PRC may be to crush any prospect of Taiwanese independence. To give another analogy: if Puerto Rico sought independence, we can ponder whether a favorable U.S. response to the cause of independence would be made more or less likely if China declared its intention to defend Puerto Rico militarily and indicated its intention to use Puerto Rico as a core ally in combating U.S. hegemony in the Caribbean."

 

If our end goal is to ensure the self-determination of Taiwan, and prevent it from being obliterated in a war, what is the correct approach? First, we should obviously avoid taking steps that would make it more likely that Beijing would decide to try to pursue unification through force. We should do our best to preserve the peaceful status quo, because if China were to seize Taiwan, it is not clear the United States could successfully defend the island, and any U.S.-China war would be a humanitarian and economic catastrophe of unprecedented magnitude, especially for the people of Taiwan.

 

In fact, there is good reason to believe a war over Taiwan can be avoided. The Taiwanese themselves, when polled, are far more likely to say that they do not think the situation will end in war, and “some Taiwan politicians think that the US’s increasingly bitter competition with China is adding to the risk.” The Financial Times quoted a Taiwanese expert who said that “Washington needed to better explain its growing alarm over the perceived risk of a Chinese attack.” And a researcher at the Taiwanese Institute for National Defense and Security Research assessed the risk of a Chinese attack as “very low.” The Taiwanese and Chinese governments have actually met on cordial terms in fairly recent memory and millions of Chinese tourists visit Taiwan each year. There is even a conceivable peaceful path to eventual independence by which the status quo is maintained until Taiwanese autonomy is essentially a fact rather than an aspiration, and in which, in future generations to come, the Chinese desire for reunification becomes an anachronistic piece of rhetoric no longer taken seriously. (Outright independence is controversial even in Taiwan and the shape of the ideal long-term outcome is unclear. Whatever it is, it should certainly not be determined by the United States’ aspirations for Taiwan.)

 

Following the path to a lasting peaceful and just settlement will require the United States to refrain from actions that make China feel it needs to assert its might, or that make it see a failure to pursue reunification through force as a humiliating capitulation to the United States. We must avoid creating the impression that we consider China an enemy and Taiwan a crucial ally against that enemy. We should certainly avoid entering into an arms race with China that turns the region into a “powder keg.”

 

Unfortunately, there is good reason to believe that U.S. support for Taiwanese self-determination has little to do with a principled belief in democracy and everything to do with preserving our power in Asia. (After all, if we believed on principle in self-determination for all the peoples of faraway lands, we would not be pouring weapons into Israel to keep Palestinian self-determination from breaking out.) Instead, Chris Horton of The Atlantic explains why the United States is so invested in the cause of Taiwan:

 

“[It] is difficult to overstate Taiwan’s strategic importance to both the United States and an increasingly assertive China. The island’s location, economy, and security are all essential to American interests, and if Taiwan were to become part of China, as Beijing has insisted it must, China would instantly become a Pacific power, control some of the world’s most cutting-edge technologies, and have the ability to choke off oil shipments to Japan and South Korea—leverage it could use to demand the closure of U.S. military bases in both countries. In effect, Beijing would likely be able to achieve its goal of forcing the U.S. out of Asia. It is no surprise, then, that Taiwan is one of the rare issues on Capitol Hill today with bipartisan agreement—Congress has been regularly passing pro-Taiwan legislation with unanimous support throughout the Donald Trump era.”

[Luke]

Are we really committed to Taiwan out of a belief in self-determination, then? One might answer that it does not matter: Taiwanese self-determination is a right worth defending even if the United States has ulterior motives. But if the interest of the United States is in a U.S.-aligned Taiwan rather than a free Taiwan—indeed, we supported Taiwan even when it was an authoritarian state—this may lead the U.S. to forgo actions that would be in the interest of Taiwanese self-determination but bring Taiwan and China closer together. For instance: Lyle Goldstein says that, as was the case with Ukraine, there are opportunities for diplomacy, but they involve fostering warmer relations between China and Taiwan:

 

So many opportunities were missed to avert the war in Ukraine. To state the obvious, if they had simply declared that Ukraine would be a neutral state, how hard would that have been? … That was a completely feasible option, but it just didn’t fit with our ideology. The idea that we might climb down, that we might compromise—that’s showing weakness, so we can never do that. Taiwan has all kinds of diplomatic positions. We should be encouraging those. … There are all kinds of compromises to be made, people-to-people exchanges, military confidence-building measures. All of that should’ve happened with Ukraine and Russia, but no, we insisted on a confrontational approach, and now we have a ghastly war.

 

Instead of trying to facilitate amicable cross-strait relations, we have instead opted for the course of encouraging Taiwan to become a missile-covered “porcupine” that can resist a Chinese invasion. U.S. officials have been deliberately taking steps that they know will anger China—such as Biden promising he would go to war with China over the island, and Nancy Pelosi’s self-aggrandizing visit. In doing so, we may flatter ourselves that we are supporting Taiwanese self-determination, but what we are actually doing is increasing the likelihood that the country will be destroyed. (The situation was similar in Ukraine: the (empty) promise to admit Ukraine to NATO was justified in the name of Ukraine’s security. But it did nothing to dissuade Vladimir Putin from his belief that without his deployment of force, Ukraine would end up as part of a hostile Western military alliance.) For 50 years, the U.S. has accepted the “One China” policy, with neither side making moves to undermine it. It could continue, in the absence of reckless and provocative moves by the U.S.

 

In fact, China’s sensible long-term strategy regarding Taiwan is not to invade, which would severely harm itself and its prospects, and perhaps spark a suicidal war. (It also hasn’t shown signs of planning to invade.) Without invading, China can make clear that if it chose to, it could strangle the island, which survives on trade. China can continue to pursue its long-term strategy of becoming the center of Eurasia, with vast development and investment projects (now incorporating parts of Africa and even U.S. domains in Latin America) expanding to the Middle East. Europe will look on and try to figure out how to get into this enormous China-based economic system, and over time, Taiwan will increasingly want to join as well, improving commercial relations. China is certainly a threat to U.S. economic power: this is what’s likely to produce violent conflict with the United States, not the threat of invading Taiwan.

[Luke]

"U.S. tension with China is sometimes characterized as the classic “security dilemma” of international relations, “whereby military programs and national strategies deemed defensive by their planners are viewed as threatening by the other side,” in the words of Paul Godwin of the Foreign Policy Research Institute. Stephen M. Walt warns “remarkably, plenty of smart, well-educated Westerners—including some prominent former diplomats—cannot seem to grasp that their benevolent intentions are not transparently obvious to others.” In other words, China does not see that we are (supposedly) only trying to deter Chinese aggression when we take such steps as: building a hostile regional military alliance, flooding the surrounding territory with high-precision weaponry aimed at China, labeling China an “enemy,” sending increasing numbers of warships to patrol its coast (ostensibly to enforce the Law of the Sea Convention—which we have not signed—and given the euphemism “freedom of navigation operations”), sending Australia a fleet of nuclear submarines to counter China, and conducting military exercises near China’s shores. China is not supposed to act the way we would act if Chinese warships were steadily accumulating in the Gulf of Mexico and conducting military exercises. Chinese military drills are interpreted by us as hostile, but the U.S. organizing the largest maritime warfare exercise in the world as a warning to China should not be interpreted by China as hostile. The Chinese are supposed to accept that we only ever engage in “defense,” while it is other countries that engage in “aggression.”

 

But let us consider the possibility that our actions are not, in fact, best characterized as “defensive” at all. Americans might not pay close attention to American actions, but the Chinese do, and perhaps China is not tragically misinterpreting our policy, but has simply read our publicly available strategy documents. They see that U.S. planners wish to maintain control of the Indo-Pacific and deny China the right to do in the Eastern Hemisphere what we have done in the Western Hemisphere. They might open the Wall Street Journal and read the “Henry Kissinger Distinguished Professor of Global Affairs” arguing that to protect the “world America built,” we must undertake a new “urgent, enduring effort to contain an advancing rival,” even if this means new “Cold War-style tensions and crises” (i.e., the constant threat of human civilization coming to an abrupt and violent end). The Chinese government may also read in our new National Defense Authorization Act that the secretary of defense is tasked with “strengthen[ing] United States defense alliances and partnerships in the Indo-Pacific region so as to further the comparative advantage of the United States in strategic competition with the People’s Republic of China.” They might hear our talk of the “rules-based order” and then remember that Barack Obama, speaking of the Trans-Pacific Partnership, said “the rule book is up for grabs. And if we don’t pass this agreement—if America doesn’t write those rules—then countries like China will.” In 2012, they saw leading “moderate” Republican Mitt Romney pledge to “ensure that this is an American, not a Chinese century,” arguing that “security in the Pacific means a world in which our economic and military power is second to none,” i.e., we have an inherent right to be more powerful than China and point city-destroying weapons at it that we could deploy at a moment’s notice.

 

The United States may be incapable of seeing its own actions as anything other than idealistic and benevolent, but our own government has clearly stated our intention to prevent a “fair fight” and maintain the ability to annihilate anyone who challenges our power. As John Mearsheimer explained in 2005, the increasing tension as China grows more powerful comes about because:

 

The US does not tolerate peer competitors. As it demonstrated in the 20th century, it is determined to remain the world’s only regional hegemon. Therefore, the U.S. can be expected to go to great lengths to contain China and ultimately weaken it to the point where it is no longer capable of ruling the roost in Asia. In essence, the U.S. is likely to behave towards China much the way it behaved towards the Soviet Union during the Cold War.

 

The United States intends to rule the world, even if that requires escalating the threat of a war that will be possibly terminal to human civilization, and of course eschewing diplomacy, (which would be appeasement).

 

The starting point for reducing tensions with China, then, is to take a look in the mirror and ask whether each demand we make of it is fair, and whether we are willing to do unto others as we ask them to do unto us. We might consider whether a good relationship is ever likely if we continue trying to ring China with hostile sentinel states in an attempt to contain its power. We might also consider whether China has certain legitimate grievances against the demands made by the United States. On climate change, for instance, we are depending on China not to behave nearly as destructively as we have. The average American is a far worse carbon polluter than the average Chinese person, and the U.S. and Europe are responsible for the bulk of historical emissions, meaning that China must be far less irresponsible as it develops if it hopes to avoid accelerating the catastrophe. When we ask China not to expand the reach of its military across the globe, or not to contemplate the overthrow of governments it feels threatens its interests, or to treat U.S. intellectual property claims as universal, we are asking for it to show more restraint than we have, and not to seek the kind of power we have sought. These requests may make sense—if all countries acted like the U.S., the world would quickly be destroyed—but they should be made from a position of humility.

 

The situation we face now is unbelievably dangerous. An insane arms race is underway. For many years, China kept a relatively low level of nuclear weapons, and proudly so. Now it is accelerating production of weapons that can only ever either be (1) a massive waste of resources (if unused) or (2) a genocidal horror (if ever used). Even Henry Kissinger—hardly a man of peace—has warned that the United States and China are stumbling toward a World War I-like calamity. Of course, in the age of thermonuclear weapons, the potential for destruction is far, far greater than it was in 1914.

 

It does not have to be this way.

 

First, we should recognize that the idea that China poses a military threat to the United States itself is so absurd that Lyle Goldstein says it is “almost a joke in national security circles,” citing the example of “11 U.S. nuclear aircraft carriers versus a single Chinese conventional ‘test’ aircraft carrier.” China does, however, pose a threat to the United States’ ability to maintain its desired level of economic dominance in Asia. If we are unwilling to share the Earth, conflict is assured.

 

There are undoubtedly deep areas of contention between the United States and China that will take long, laborious negotiations to resolve to the satisfaction of both parties. Perhaps there will be compromises that please nobody. But we should begin from the position that war is simply not a thinkable option in the 21st century. Martin Luther King, Jr., was correct when he said that the choice we face is: “We must learn to live together as brothers or perish together as fools.” A Third World War must not happen under any circumstances.

 

China, for its part, has implored the United States (and the U.K.) not to adopt a “Cold War mentality,” arguing that it is “irresponsible” to hype up the threat and saying we must “cast away imagined demons.” China has accused the U.S. of trying to “reignite a sense of national purpose by establishing China as an imaginary enemy.” Indeed, the “igniting a sense of national purpose by establishing an imaginary enemy” is precisely what we have a history of doing in this country, and it wouldn’t be the first time that the Chinese have been blamed for America’s domestic problems. (Those hyping the “China threat” will of course see China’s warnings about a “Cold War mentality” as sneaky attempts to trick us into letting our guard down so the CCP can infiltrate Des Moines.) The editors of Yellow Peril!: An Archive of Anti-Asian Fear helpfully review the history of U.S. politicians whipping up fear of Asiatic enemies to argue that “that horrid, pestilent other is causing all our problems.” When “the political culture can’t quite deliver its promises, it will appease the white working class by creating an external enemy and blaming the victim.” The “they” threatening our way of life is ever-changing, but in every case resolvable conflicts of interest become “epic civilizational contests between imagined diametrically opposed foes.”

 

And now as Charlie Munger said on BRK AGM 2023:

 

We should be cooperating with China. It is necessary for China and the United States, two major economies, to sort out crucial issues together, like global warming, pandemics, and nuclear weapons. Our fates are tied together. There is no choice but to get along. Yet relations have been falling apart. After Nancy Pelosi’s visit to Taiwan, in addition to launching new military exercises that could lead to deadly errors and escalation, China broke off talks with the U.S. about climate change, among other matters. The climate crisis is the perhaps most important issue facing the world, a major emergency, and now the two leading powers in the world can’t even discuss how to solve it. This is the road to disaster. The U.S. needs to stop needlessly stoking conflict, think about how things look from the Chinese perspective, and work sincerely to understand and collaborate with a country of 1.4 billion people we have to share a planet with. This does not mean one must be an apologist for China’s wrongdoing, or that its human rights abuses should not be taken seriously. It means that the U.S. must cease to consider global control a “vital interest” and must accommodate and respect the interests of others. It means that the pursuit of long-term survival of the species means abandoning the desire to permanently preserve our hegemony.

Edited September 4, 2023 by Luca

[Spekulatius]

8 hours ago, Parsad said:

 

You're right.  The guy investing in typewriters is not exposed to political or property rights risk.  

 

My point is that there is absolutely zero need for an investor to accept political or property risk by investing in China.  You can do perfectly fine in North America by just being patient and waiting for fat pitches. 

 

Especially if you are managing less than $150B!  I'm guessing most people are.  Cheers! 

Tepper move seems more like a giant swing at a big tech which includes some Chinese securities as well. He used to be a distressed security investor - has he become a swingtrader now? I don’t think he was ever buy and hold.

[james22]

U.S. Commerce Secretary Gina Raimondo said U.S. companies have complained to her that China has become "uninvestible," pointing to fines, raids and other actions that have made it risky to do business in the world's second-largest economy. . . .

 

"Increasingly I hear from American business that China is uninvestible because it's become too risky," she said. Raimondo said American firms are facing new challenges, among them "exorbitant fines without any explanation, revisions to the counterespionage law, which are unclear and sending shockwaves through the U.S. community; raids on businesses – a whole new level of challenge and we need that to be addressed." . . .

 

"All of that creates uncertainty and unpredictability," Raimondo said of recent Chinese actions. "So businesses look for other opportunities, they look for other countries, they look for other places to go." Referring to both old and new business restrictions, Raimondo said, "The sum total of which is making China feel too risky for them invest."

 

https://www.reuters.com/markets/us-commerce-chief-set-meet-chinese-vice-premier-beijing-2023-08-29/

 

[Luke]

https://www.bloomberg.com/news/features/2023-09-04/look-inside-huawei-mate-60-pro-phone-powered-by-made-in-china-chip

 

Huawei Teardown Shows Chip Breakthrough in Blow to US Sanctions

[SharperDingaan]

Like it or not, China is about as investable as a Russia; you are not getting your money out unless you take it in goods, and even then - at cents on the dollar.

 

Everybody needs an enemy to support their military-industrial complex, and the outcome is an apartheid like detente. When one enemy collapses (Russia), a new one gets created (China). Entirely rational, & just the way of the world.

 

As in the colonial era, the world is in another land grab; separating into American, Chinese, BRIC, & other. The powers do their thing, we eventually get balance again, then it's business again as normal.

 

The reality is that it is a lot less risky,  & a lot more reliable, to simply invest domestically vs in china. The only people bitching are those trying to exit china, & discovering there is no market to sell into.

 

Pick your tribe & just get on with it.

 

SD

 

Edited September 4, 2023 by SharperDingaan

[SharperDingaan]

On 9/3/2023 at 1:52 PM, james22 said:

 

Why not?

 

Troublesome businesses are routinely seized, & founders 're-educated' in the new reality. Whether anyone ever sees the founder again, depends upon how rational he/she chooses to be. Your brains or your signature on the contract; either works for us.

 

SD

 

Edited September 4, 2023 by SharperDingaan

[backtothebeach]

On 9/1/2023 at 11:13 PM, Parsad said:

 

The Chinese bank won't release the funds.  We attempted numerous ways with advice from Chinese and HK experts after several attempts to just withdraw the funds and transfer to our HK bank account were declined.

 

A couple of examples:

• We've tried to produce invoices from here to indicate there are expenses paid in Canada that are owed by the Chinese subidiary...the bank declined saying that the Chinese government was restricting the withdrawal.  
• We tried to sell the subsidiary to our general manager, in turn he would transfer ownership of his HK company to us with equivalent cash...wouldn't let the Chinese transfer occur.
• Tried to sell to another Chinese company...they demanded audited financial statements...which we produced.  Still declined the transaction.

Six bloody years and still no way to get at the funds!  And people want to invest in China!  Cheers!

 

Maybe you can open a Yuan account in Argentina and transfer it there.

Just kiddin'...

https://www.bloomberg.com/news/articles/2023-06-29/argentina-s-central-bank-allows-banks-to-open-accounts-in-yuan

[james22]

2 hours ago, SharperDingaan said:

 

Troublesome businesses are routinely seized, & founders 're-educated' in the new reality. Whether anyone ever sees the founder again, depends upon how rational he/she chooses to be.

 

Your brains or your signature on the contract; either works for us.

 

SD

 

 

That's why they can't just do whatever they want, sure.

 

I was curious why Luca believed they shouldn't.

 

Innate rights (secured and protected by law) wasn't his answer.

[tnp20]

This is like religion. No one is going to convince the other side. There are fair points on both sides...you place your money on various global chips on the table and reap what comes as a result.

[Parsad]

15 hours ago, SharperDingaan said:

Like it or not, China is about as investable as a Russia; you are not getting your money out unless you take it in goods, and even then - at cents on the dollar.

 

Everybody needs an enemy to support their military-industrial complex, and the outcome is an apartheid like detente. When one enemy collapses (Russia), a new one gets created (China). Entirely rational, & just the way of the world.

 

As in the colonial era, the world is in another land grab; separating into American, Chinese, BRIC, & other. The powers do their thing, we eventually get balance again, then it's business again as normal.

 

The reality is that it is a lot less risky,  & a lot more reliable, to simply invest domestically vs in china. The only people bitching are those trying to exit china, & discovering there is no market to sell into.

 

Pick your tribe & just get on with it.

 

SD

 

 

LOL!  +1!  Cheers!

[UK]

15 hours ago, SharperDingaan said:

The reality is that it is a lot less risky,  & a lot more reliable, to simply invest domestically vs in china. The only people bitching are those trying to exit china, & discovering there is no market to sell into.

 

Pick your tribe & just get on with it.

 

SD

 

 

 

Edited September 5, 2023 by UK

[Spekulatius]

Even if something is "un-investible" it can be an intelligent speculation.

[sleepydragon]

https://asia.nikkei.com/Editor-s-Picks/China-up-close/Analysis-Xi-reprimanded-by-elders-at-Beidaihe-over-direction-of-nation

[John Hjorth]

Youtube : Leonard Cohen - First We Take Manhattan (Live in London),

 

However we may need an updated version : "First we take Russia, then we take China".

[sleepydragon]

https://twitter.com/thisischaniece/status/1699029265042506041?s=46&t=Z-gsu-O6_LALehjknzotyA

 

[tnp20]

2 hours ago, sleepydragon said:

https://asia.nikkei.com/Editor-s-Picks/China-up-close/Analysis-Xi-reprimanded-by-elders-at-Beidaihe-over-direction-of-nation

 

Thanks for posting that article.  Yeah "Xi" is screwing up badly and elders are worried about future stability and support for CCP ....there are 4 scenrarios I see....

 

(i) XI gets removed. This is low odds.

                  (a) New guy worse - disaster for China and possibly the global economy - this is a super low odds here.

                  (b) New guy slightly or materially better - some confidence is regained with respect to China initially and further as more confirming and positive data comes in

 

(ii) Xi doesn't get removed - most likely

                   (a) He maintains his destructive course and even double downs - economy worsens and stability is threatened - this would result in (i) above sooner or later.

                    (b) He pulls back like he did with his Covid policy and presses his sub-ordinates to go all out on the economy - economy recovers in the near and medium term and stocks get a relief rally/sugar rush at minimum.

 

(ii)(b) is most likely from a logical point of view otherwise pressure on Xi will be tremendous.

 

And then the second striking factor is that the central government has essentially no debt. Central government debt has different definitions, but including the railway ministry, it’s 25 percent of GDP, which is a fraction of the debt of the U.S. federal government. It’s a fraction of the debt of France. It’s well below the debt of Germany, which is by far the most frugal of the major advanced economies.

 

https://nymag.com/intelligencer/2023/09/will-chinas-economic-slump-hit-the-u-s.html

 

 

 

If this is true, they have plenty of fiscal space to juice economy IF THEY WANT TO. And having the capacity is the hard part, the will to do it is just a soft decision part that can be switched on or off easily. If they didnt have the capacity, it would be a different story.

 

This means local government debt can be soft transferred to the central government alleviating local government debt burdens....

 

 

 

 

[sleepydragon]

3 minutes ago, tnp20 said:

 

Thanks for posting that article.  Yeah "Xi" is screwing up badly and elders are worried about future stability and support for CCP ....there are 4 scenrarios I see....

 

(i) XI gets removed. This is low odds.

                  (a) New guy worse - disaster for China and possibly the global economy - this is a super low odds here.

                  (b) New guy slightly or materially better - some confidence is regained with respect to China initially and further as more confirming and positive data comes in

 

(ii) Xi doesn't get removed - most likely

                   (a) He maintains his destructive course and even double downs - economy worsens and stability is threatened - this would result in (i) above sooner or later.

                    (b) He pulls back like he did with his Covid policy and presses his sub-ordinates to go all out on the economy - economy recovers in the near and medium term and stocks get a relief rally/sugar rush at minimum.

 

(ii)(b) is most likely from a logical point of view otherwise pressure on Xi will be tremendous.

 

And then the second striking factor is that the central government has essentially no debt. Central government debt has different definitions, but including the railway ministry, it’s 25 percent of GDP, which is a fraction of the debt of the U.S. federal government. It’s a fraction of the debt of France. It’s well below the debt of Germany, which is by far the most frugal of the major advanced economies.

 

https://nymag.com/intelligencer/2023/09/will-chinas-economic-slump-hit-the-u-s.html

 

 

 

If this is true, they have plenty of fiscal space to juice economy IF THEY WANT TO. And having the capacity is the hard part, the will to do it is just a soft decision part that can be switched on or off easily. If they didnt have the capacity, it would be a different story.

 

This means local government debt can be soft transferred to the central government alleviating local government debt burdens....

 

 

 

 

 

Another important take away from this is Xi’s power is not unchecked, like many westerners believed. The elders are still pretty powerful and are not blind to the problems in China. 
 

Also, I think the chance he get removed or severely weakened is higher. If the elders are not confident and are ready to remove him, they will not complain to him at all.

[Spekulatius]

41 minutes ago, sleepydragon said:

https://twitter.com/thisischaniece/status/1699029265042506041?s=46&t=Z-gsu-O6_LALehjknzotyA

 

This article seems very speculative. I don't think anyone can know what is going on within the CCP inner circle.

[sleepydragon]

27 minutes ago, Spekulatius said:

This article seems very speculative. I don't think anyone can know what is going on within the CCP inner circle.

Japanese news usually have pretty read on Chinese affairs.  Look at the recent “spy” arrests by China, they are Japanese..

 

Anyway, at least the video of Li Keqiang still touring around, smiling andaccepting people’ applauding , that’s pretty unusual..in china

[Parsad]

5 hours ago, Spekulatius said:

Even if something is "un-investible" it can be an intelligent speculation.

 

Nooooo!  Speculation is speculation.  Nothing intelligent about it.  

 

Doesn't mean you can't do it though.  

 

Cheers!

[mcliu]

https://www.reuters.com/technology/teardown-huaweis-new-phone-shows-chinas-chip-breakthrough-2023-09-04/