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I see some instability with China as it has grown a stronger domestic market, which is positive, but they are going to have to more directly deal with their ine

I see some instability with China as it has grown a stronger domestic market, which is positive, but they are going to have to more directly deal with their inefficiencies. They are and will continue to struggle to export themselves out of their economic problems. This also relates to their internal inflation. Belt and road is good for importing materials and exporting cheap goods, but it isn't enough. Not sure if the Chinese middle class are going to be able to pick up the slack. The current leadership doesn't seem to care at the moment and expect everyone to sacrifice for the party. I've seen this decoupling argument used in Canada a lot. It doesn't work very well there. The country is still completely dependent on the US market. They've tried Europe, Asia Pacific, and China, with a minimal budge in its current dependency. The disruption and economic pain are too high to force it in to existence and would be political suicide. Maybe the an authoritarian and central planning model can get over that in China? If the current internal investment inefficiencies are any clue, I would say no.

thephyber 4y ago
I can’t figure out why China hasn’t priced themselves out of exports yet. Normally countries move up the value chain as their domestic standard of living improves and their currency strengthens. Then other countries find their exports unaffordable. I know China has pegged their currency to the USD and only rarely begrudgingly let it float slightly. It seems to me that “the ledger” isn’t balanced and that something is being kept off the books.
- prewett 4y ago
  There are lots of people from the countryside, where, as far as I can tell, one's options are basically subsistence farming. Until the supply of people from the countryside dries up (and it has, to some extant), there won't be a lot of wage pressure upwards. I don't think the RMB is pegged to the dollar. Certainly not like Hong Kong, which is an actual peg. The RMB has fluctuated between 6.2 and 7.3 the past few years. China does limit its daily level of change, though.

thephyber 4y ago

I can’t figure out why China hasn’t priced themselves out of exports yet. Normally countries move up the value chain as their domestic standard of living improves and their currency strengthens. Then other countries find their exports unaffordable. I know China has pegged their currency to the USD and only rarely begrudgingly let it float slightly. It seems to me that “the ledger” isn’t balanced and that something is being kept off the books.

prewett 4y ago
There are lots of people from the countryside, where, as far as I can tell, one's options are basically subsistence farming. Until the supply of people from the countryside dries up (and it has, to some extant), there won't be a lot of wage pressure upwards. I don't think the RMB is pegged to the dollar. Certainly not like Hong Kong, which is an actual peg. The RMB has fluctuated between 6.2 and 7.3 the past few years. China does limit its daily level of change, though.