3 ms·

China is sending us goods - what are we sending back? It can't be just the funny money that we print, can it? Otherwise, what is the problem?

sudosysgen 2y ago
The funny money we print allows China to invest in third countries, build up their manufacturing base, and buy resources. It makes sense for them to do this until their economy surpasses ours, then they plan on moving to an internal consumption centric model.
- ArtTimeInvestor 2y ago
  Invest into what in other countries? Companies? Land? Does that really work? Can you enslave the world by buying other countries? Like "Ha, Italy, you work for us now because we own all your infrastructure!"? Wouldn't Italy just tell them to GFYS at some point, if China stops sending goods or US Dollar and just wants to get stuff for free?
  - LettuceSand12 2y ago
    Maybe Italy could but how many countries in the belt and road initiative can do that right now? In fact they are not even incentivized to do so as Chinese money is providing them the chance to build up modern infrastructure.
  - lo_zamoyski 2y ago
    That's easy, huh? To make things more concrete, look at how long the EU was (and still is) dependent on Russian gas. Russia even used it to influence politics by shutting off supply to Ukraine. Poland, along with its non-German neighbors especially, have been working to diversify their supply to prevent that, but it basically took the war in Ukraine to push Europe in that direction (and even then, reluctantly; take Germany for example). Or consider the case where your economic partner is much larger economically (like US in relation to Mexico). Who do you think has more weight at the negotiating table? Who has more money to influence political realities? Who can take a bigger hit? There is mutual dependence, but the relationship is not symmetrical. It's easy to say GFYS, but often difficult to do in practice. First, there has to be an alternative, second, you have to migrate to that alternative. This can be costly if not practically impossible until a contender emerges: he'll have your back against the other, but now you're their vassal, so to speak. Some call this phenomenon "neocolonialism"; Picketty also uses the term "foreign-owned countries". You get lodged in a web of incentives. You always are. Right now, the China-US dependent is something like: the US needs China for cheap labor and cheap goods, but China needs the US to buy all these things to fuel its economy. The balance can eventually tip and shift, however. Indeed, that's what BRICS is about.
    - sottol 2y ago
      Wasn't the strategy to exploit the European dependence on gas a failure then though because especially Germany didn't really put up a fight against the sanctions to keep using the cheap Russian gas. One can argue about how "painless" it was, but I would have thought that stopping Russian gas imports within a few months would cause a recession and a lot more havoc in the economy. And I always assumed that was what Russia was counting on, Germany's dependence and thus tacit support but I didn't see much of that.
- 39896880 2y ago
  > then they plan on moving to an internal consumption centric model. China does not have the demographics for this.
  - sudosysgen 2y ago
    Huh? An aging population is actually one of the things that will force it. More retirees will take more of the surplus from the productive population and reduce the surplus left for export.
    - 39896880 2y ago
      Peak consumption happens around 45-54, and then declines. Kids are out of the house (which is paid for). At retirement, consumption is more conservative because the retiree is on a fixed income. Speaking of fixed incomes, these retirees are dependent on risky investments like real estate (collapsing) and public pension schemes (about to collapse). On top of this, retirees aren’t generally the consumers of the supply chain components that China makes. Remember, they never moved up the value chain of sophisticated goods manufacturing. They got too expensive before that.
      - sudosysgen 2y ago
        I'm not talking about peak consumption, I'm talking about the production-consumption split.
danny_taco 2y ago
If you actually read the article, what we send back is just IOUs or funny money. It's irrelevant what we send back actually, because the goal could be deindustrialization of other countries. The actual goods created are just the side effect of industrial production in order to keep their industries running until they need to swap them to military production.
jhbadger 2y ago
There is a misconception that the US is just buying Chinese goods with dollars and not selling them anything, but this isn't true. The US exports hundreds of billions of dollars of goods to China every year, from agricultural products, to petroleum, to civilian aircraft, to cars and trucks, to even specialized electronics. https://usafacts.org/articles/what-are-the-top-us-exports-to-china/ https://usafacts.org/articles/what-are-the-top-us-exports-to...

sudosysgen 2y ago

The funny money we print allows China to invest in third countries, build up their manufacturing base, and buy resources. It makes sense for them to do this until their economy surpasses ours, then they plan on moving to an internal consumption centric model.

ArtTimeInvestor 2y ago
Invest into what in other countries? Companies? Land? Does that really work? Can you enslave the world by buying other countries? Like "Ha, Italy, you work for us now because we own all your infrastructure!"? Wouldn't Italy just tell them to GFYS at some point, if China stops sending goods or US Dollar and just wants to get stuff for free?
- LettuceSand12 2y ago
  Maybe Italy could but how many countries in the belt and road initiative can do that right now? In fact they are not even incentivized to do so as Chinese money is providing them the chance to build up modern infrastructure.
- lo_zamoyski 2y ago
  That's easy, huh? To make things more concrete, look at how long the EU was (and still is) dependent on Russian gas. Russia even used it to influence politics by shutting off supply to Ukraine. Poland, along with its non-German neighbors especially, have been working to diversify their supply to prevent that, but it basically took the war in Ukraine to push Europe in that direction (and even then, reluctantly; take Germany for example). Or consider the case where your economic partner is much larger economically (like US in relation to Mexico). Who do you think has more weight at the negotiating table? Who has more money to influence political realities? Who can take a bigger hit? There is mutual dependence, but the relationship is not symmetrical. It's easy to say GFYS, but often difficult to do in practice. First, there has to be an alternative, second, you have to migrate to that alternative. This can be costly if not practically impossible until a contender emerges: he'll have your back against the other, but now you're their vassal, so to speak. Some call this phenomenon "neocolonialism"; Picketty also uses the term "foreign-owned countries". You get lodged in a web of incentives. You always are. Right now, the China-US dependent is something like: the US needs China for cheap labor and cheap goods, but China needs the US to buy all these things to fuel its economy. The balance can eventually tip and shift, however. Indeed, that's what BRICS is about.
  - sottol 2y ago
    Wasn't the strategy to exploit the European dependence on gas a failure then though because especially Germany didn't really put up a fight against the sanctions to keep using the cheap Russian gas. One can argue about how "painless" it was, but I would have thought that stopping Russian gas imports within a few months would cause a recession and a lot more havoc in the economy. And I always assumed that was what Russia was counting on, Germany's dependence and thus tacit support but I didn't see much of that.
39896880 2y ago
> then they plan on moving to an internal consumption centric model. China does not have the demographics for this.
- sudosysgen 2y ago
  Huh? An aging population is actually one of the things that will force it. More retirees will take more of the surplus from the productive population and reduce the surplus left for export.
  - 39896880 2y ago
    Peak consumption happens around 45-54, and then declines. Kids are out of the house (which is paid for). At retirement, consumption is more conservative because the retiree is on a fixed income. Speaking of fixed incomes, these retirees are dependent on risky investments like real estate (collapsing) and public pension schemes (about to collapse). On top of this, retirees aren’t generally the consumers of the supply chain components that China makes. Remember, they never moved up the value chain of sophisticated goods manufacturing. They got too expensive before that.
    - sudosysgen 2y ago
      I'm not talking about peak consumption, I'm talking about the production-consumption split.

danny_taco 2y ago

If you actually read the article, what we send back is just IOUs or funny money. It's irrelevant what we send back actually, because the goal could be deindustrialization of other countries. The actual goods created are just the side effect of industrial production in order to keep their industries running until they need to swap them to military production.

jhbadger 2y ago

There is a misconception that the US is just buying Chinese goods with dollars and not selling them anything, but this isn't true. The US exports hundreds of billions of dollars of goods to China every year, from agricultural products, to petroleum, to civilian aircraft, to cars and trucks, to even specialized electronics. https://usafacts.org/articles/what-are-the-top-us-exports-to-china/ https://usafacts.org/articles/what-are-the-top-us-exports-to...