7 ms·

The comparison to Soviet Union is problematic but definitely more relevant than US investment scenarios that you highlighted. The US scenario you highlighted w

The comparison to Soviet Union is problematic but definitely more relevant than US investment scenarios that you highlighted. The US scenario you highlighted would be more comparable to Chinese investment in the last 25 years, no? The clear difference between Soviet Union and China is that China has a growing and robust economy, with a firm grip on the situation whereas the Soviet Union was aching away on so many lies. Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say. The articles comparison may be overblown but it's not without reason. I believe that the China boom has mostly been had, and we're going to see lower growth from here on in; that said, it'll be consistent and positive and they aren't going to disappear as a superpower.

seanmcdirmid 8y ago
There are more booms to be found in China, for sure. But corrections/recessions/crashes are needed to wash out the bad elements so the better ones can thrive. The party has stated they can do this on their own, but given that their families' control of large parts of the economy has become a huge part of the problem they are unwilling to manage (which would have been hard anyways).
- fspeech 8y ago
  Crashes are happening all the time. For example right now P2P lending is crashing hard. The question is if it is worth it to have a systematic crash in order to clear the markets, as in Andrew Mellon's "liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate." China is not the only one in the modern world unwilling to crash systematically.
Gibbon1 8y ago
> Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say. My feeling is business people and economists are upset that China utterly refuses to follow neoliberal economic polices. Preferring instead to follow old school Keynesian policies. Policy makers thus view China as economically in a state of sin. Typically countries that try to follow Keynesian economic policies get hammered by western central banks and monetary institutions. However China is way both too large to be 'punished' like that and has iron fisted control of it's own currency. That leaves western and in particular US monetary authorities powerless to do anything. Hence the constant butthurt blather for the last 30 years that that Chinese expansion only has 5 more years left before it collapses. Notable: In 2008 the US and Europe followed neoliberal austerity policies to make sure that the banks and paper wealth were made whole. Resulting in a very slow recovery and increasing poverty and political blow back. China responded by building the worlds largest high speed rail network.
- mr_toad 8y ago
  China’s external debt to GDP is one of the lowest in the world, as is their debt per capita. They aren’t going to be ‘punished’ by creditors because they don’t have significant debt. In fact, it’s more likely that China will be the one doing the punishing down the road.
  - dnomad 8y ago
    This is what really irks the West. China did not allow themselves to be controlled by external debt like the Soviet Union. The Chinese have not only avoided debt slavery they have actually begun to weaponize their own debt power and such that they are now the world's largest sovereign lender.
    - User23 8y ago
      The US doesn't borrow money from China. The US swaps treasuries for reserves with the Federal Reserve, which then sells those treasuries to primary dealers, who in turn sell them on the open market where anyone including foreign sovereigns like China, can buy them. In the unlikely event that the Federal Reserve failed to sell those instruments, they'd be left on their balance sheet and the interest would be remitted back to the US treasury. So long as there is any demand for US dollars though, there will always be a demand for interest bearing instruments that have near cash-like liquidity. Of course if you're referring to China's African colonies and their use of debt to control the local governments, then yes that's accurate.
      - sonnyblarney 8y ago
        It's the same thing as borrowing. US gov sells TBills, those TBills are bought by China. The transaction you described also translates government debt into currency, which China also sits on, so it's a kind of an exchange debt. So the US 'owes' China a gazillion dollars in services and stuff. One way or another.
        User23 8y ago
sswaner 8y ago
Perhaps a better comparison is a slightly older one - the economic consequences of the Russian investment in the Trans-Siberian Railway. The significant [struggling to find a citation with numbers] investment as a percentage of GDP between 1891 and 1916 starved other capital investments that would have yielded greater return in the more populated west. In addition, the infrastructure investment brought the Russian Empire into stronger contact with previously distant empires (China and Japan). By 1914 and the start of World War 1, the railway was valuable in bringing resources from Siberia to the west. But, if that capital had been invested in the western provinces, even improved railway network in Ukraine, Poland and Belorussia, would war outcomes have been different. And, would capital investments more directly visible and related to population centers created a dynamic that would have been less sympathetic to Bolshevik ideology?

seanmcdirmid 8y ago

There are more booms to be found in China, for sure. But corrections/recessions/crashes are needed to wash out the bad elements so the better ones can thrive. The party has stated they can do this on their own, but given that their families' control of large parts of the economy has become a huge part of the problem they are unwilling to manage (which would have been hard anyways).

fspeech 8y ago
Crashes are happening all the time. For example right now P2P lending is crashing hard. The question is if it is worth it to have a systematic crash in order to clear the markets, as in Andrew Mellon's "liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate." China is not the only one in the modern world unwilling to crash systematically.

Gibbon1 8y ago

> Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say. My feeling is business people and economists are upset that China utterly refuses to follow neoliberal economic polices. Preferring instead to follow old school Keynesian policies. Policy makers thus view China as economically in a state of sin. Typically countries that try to follow Keynesian economic policies get hammered by western central banks and monetary institutions. However China is way both too large to be 'punished' like that and has iron fisted control of it's own currency. That leaves western and in particular US monetary authorities powerless to do anything. Hence the constant butthurt blather for the last 30 years that that Chinese expansion only has 5 more years left before it collapses. Notable: In 2008 the US and Europe followed neoliberal austerity policies to make sure that the banks and paper wealth were made whole. Resulting in a very slow recovery and increasing poverty and political blow back. China responded by building the worlds largest high speed rail network.

mr_toad 8y ago
China’s external debt to GDP is one of the lowest in the world, as is their debt per capita. They aren’t going to be ‘punished’ by creditors because they don’t have significant debt. In fact, it’s more likely that China will be the one doing the punishing down the road.
- dnomad 8y ago
  This is what really irks the West. China did not allow themselves to be controlled by external debt like the Soviet Union. The Chinese have not only avoided debt slavery they have actually begun to weaponize their own debt power and such that they are now the world's largest sovereign lender.
  - User23 8y ago
    The US doesn't borrow money from China. The US swaps treasuries for reserves with the Federal Reserve, which then sells those treasuries to primary dealers, who in turn sell them on the open market where anyone including foreign sovereigns like China, can buy them. In the unlikely event that the Federal Reserve failed to sell those instruments, they'd be left on their balance sheet and the interest would be remitted back to the US treasury. So long as there is any demand for US dollars though, there will always be a demand for interest bearing instruments that have near cash-like liquidity. Of course if you're referring to China's African colonies and their use of debt to control the local governments, then yes that's accurate.
    - sonnyblarney 8y ago
      It's the same thing as borrowing. US gov sells TBills, those TBills are bought by China. The transaction you described also translates government debt into currency, which China also sits on, so it's a kind of an exchange debt. So the US 'owes' China a gazillion dollars in services and stuff. One way or another.
      - User23 8y ago

sswaner 8y ago

Perhaps a better comparison is a slightly older one - the economic consequences of the Russian investment in the Trans-Siberian Railway. The significant [struggling to find a citation with numbers] investment as a percentage of GDP between 1891 and 1916 starved other capital investments that would have yielded greater return in the more populated west. In addition, the infrastructure investment brought the Russian Empire into stronger contact with previously distant empires (China and Japan). By 1914 and the start of World War 1, the railway was valuable in bringing resources from Siberia to the west. But, if that capital had been invested in the western provinces, even improved railway network in Ukraine, Poland and Belorussia, would war outcomes have been different. And, would capital investments more directly visible and related to population centers created a dynamic that would have been less sympathetic to Bolshevik ideology?