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As best as I can tell, the Chinese government's plan is to externalize the effects of all the debts that turn bad. At the end of the day, foreign investment in
by cc439 7y ago
As best as I can tell, the Chinese government's plan is to externalize the effects of all the debts that turn bad. At the end of the day, foreign investment in physical assets (factories, equipment, supply chains, etc) and infrastructure cannot simply be repossessed, especially under the auspices of a fiercely nationalistic and dictatorial Chinese government. If Chinese debt holders are no longer able to meet their obligations, the Chinese government will step in to secure the debts they hold and nationalize/seize whatever valuable assets are held by foreigners, effectively offloading all their financial problems on the rest of the world. What recourse will a company like Apple have against a sovereign nation no longer willing to play by WTO rules since they have grown strong enough to ignore all but the most sincere military threats?
- simonh 7y agoHi China, good luck buying oil without any Dollars.
- gscott 7y agoIran will take food and hard goods instead of dollars.
- cc439 7y agoChina's recent support for Maduro in Venezuela, condemnation of the US for ending their exemption from Iranian oil sanctions, and their many energy related treaties and contracts they've signed with Russia over the past decade point to their understanding of this weak point. The Chinese have been making all the right moves in positioning themselves as an alternative to American hegemony for these energy-rich countries that have become targets for the American destabilization machine. I doubt there will ever be such a thing as the PetroYuan but the era of the PetroDollar might rapidly come to a close should China goad the Maduro regime into putting their oil industry's infrastructure up as collateral in return for Chinese investment in sorely needed maintenance, upgrades, etc for that industry. China is the only nation with the financial means (even if it's all funny money as this article implies) to rebuild Venezuela's oil infrastructure that has been massively underfunded to the tune of tens of billions of USD a year for over a decade. The Maduro regime may be desperate enough to sign an agreement similar to the ones China has been offering African nations whereby a loan that will never be repaid is made with the knowledge that China will wind up owning the assets put up as collateral when the country in question eventually fails to meet their obligations.
- beambot 7y agoThis is why many companies, like Apple, are moving (factories, equipment, supply chains, etc) out of China. Then what?
- deleted 7y ago[deleted]
- dageshi 7y agoThis is rubbish. Foreign assets & factories are basically for manufacturing products for export, nationalise them and you no longer have any legal products to export, so you now have worthless exports and you lost the legitimate manufacturing & export you were doing.
- DeonPenny 7y agoThat would be a worst case cause if now the world knows that their property isn't safe they'd move out of China then FDI plummets.