Posts Tagged ‘China’
China Rising

“China is a sleeping giant. Let her sleep, for when she wakes she will move the world.” Napoleon Bonaparte

China is sowing the seeds of its own stagnation:

  • President Xi Jinping removing term limits
  • The one child policy induced decline in the workforce
  • The longer-term consequences of its negative return infrastructure led growth.
  • The censorship of thought is creativity crushing, free thinkers will think freely.

China has clearly awoken and is moving the world. Unfortunately in doing so it is also ushering in new models of despotism. Ones which enable democracies to transition to tyrannies with minimal fuss:

China said it will begin applying its so-called social credit system to flights and trains and stop people who have committed misdeeds from taking such transport for up to a year.

Twitter, Facebook and Google are already embracing authoritarianism and crushing free speech. Big business and government working hand in hand to steer the masses. What does that remind you of? Fascism is alive and well and its foundations are being built by our technology companies and their academic ideological enablers. Technology enabled fascist national socialism will be as damaging as international socialism has repeatedly proven to be.

The benevolent dictator model is great, as long as the dictator is great. Lee Kuan Yew is perhaps the best example, but for every Lee Kuan Yew there are multiple Mugabe’s. Democracies elect incompetents, but they also constrain how much damage they can do. The intensity and duration of the damage done by despots’ dwarfs that of elected leaders. Over the long term democratic systems trump despotic ones. Something the EU ought to have taken into account as it designed its undemocratic governing systems.

Deng Xiaoping learned from Lee Kuan Yew’s example in Singapore. He transformed China. China may have another good or even great leader in Xi Jinping. Removing his term limit is, to my mind, an ominous sign. Better to be further embedding a culture of peaceful regular and regulated transition.

Better also if the institutions of Western Civilisation propagated an understanding and appreciation of the building blocks its way of life, of progress and prosperity. These act as an immune system to repel destructive ideologies. Political correctness has much to answer for.

 
Economic roller coaster to hell

Dongguan in Guangdong is on the brink of bankruptcy. Up to 60 per cent of its villages are running up deficits and will soon need a bailout from the township.

It’s a race to the bottom between the US, EU, Japan and China to name but the four largest global economies. It’s perfect timing for an alternative currency to come into being.

It’s not so much a case of being on a road to hell, but a roller coaster.

 
China – More signs of a slowdown

More indications China has problems:

10 signs of economic trouble that China’s official data won’t tell

1. Makers of heavy equipment are facing troubles: Makers of heavy equipment are facing increasing difficult in collecting receivables. These companies provide vendor financing for buyers at increasingly generous terms, but it turns out that increasing number of buyers simply will not be able to repay the liabilities as the economy slows. There were even rumours that it that one of these companies was to lay-off 30% of its work force.

9. The arcane corners of (shadow) banking: Credit crisis in Zhejiang which pulls 600 companies into it: One company in Zhejiang of China gone bust. It wasn’t a big deal, until it is. It turns out that a lot of small and medium sized companies rely on “credit guarantors” to obtain bank credits. While normally you would think that such guarantors are some independent third party performing such service, it turns out that these companies in Zhejiang simply guarantee each other. So when one company went bust, banks pulled loans from every company that are guaranteed by the company that has gone. As the chain of guarantees continue to be exposed, it turns out that more than 600 companies are in it, and banks are trying to pull loans from all of these companies.

Chart 25 on Chinese investment as a percent of GDP in this presentation sums up the unsustainable nature of the China model.

To paraphrase an old saying:

If China catches a cold, will the likes of Australia sneeze?