xiaohongshu

You misunderstood what I’m saying. I am specifically talking about China opening up its market to foreign capital vs other countries trying to play the same game.

Many of the other problems you are describing were legit Western anti-China propaganda.

It went from 46% to 20%.

As I have explained before, America has been running a permanent trade deficit for the past 40 years (last year, it was $900+ billion) to absorb the global surplus capacity of the exporting countries. This ensures that the world is always running in an over-supply mode, keeping prices of the goods cheap while the workers in the exporting countries employed.

When Trump suddenly threatens to slash this massive trade deficit, while many people focus on Americans having to pay higher prices and consume less, the corresponding effect is that the exporting countries in the Global South also faces a slump in consumption demand, which will inevitably lead to production downscale, unemployment and finally recession.

This is what some of those pro-BRICS commentators who confidently said “American imports only comprised a small fraction of world trade! Nobody cares!” don’t understand about international trade, especially since the world is no longer running in a fixed exchange rate regime in the past. Well, turns out the Global South exporting countries care.

The export goods have to go somewhere, and if not, assuming constant global demand, you’re going to be competing with the other exporting countries to dump them somewhere else, and how are you going to compete with the Chinese goods? If you can’t compete with China, then you will go into recession, and maybe looking for an IMF bailout in the near future. So, they still have to sell to America, and what Trump is doing is simply waiting to see what concessions these countries would give. And those exporting countries now compete with one another to see who can be the first to sell their goods to the US to maintain their competitive advantage.

Re-industrialization is a scam. The real goal is to reshape the global supply chain to America’s interest.

This is also why I always say that the only way to counter-attack is for China to ramp up its import to absorb all these exports from the Global South. This means China will have to give up its export industries and transition into a domestic consumption economy (should have done that like 10 years ago). This will automatically render the dollar hegemony useless because those countries will no longer have to sell their goods to the US.

Let’s not pretend like China didn’t open up its market to the Americans in order to kill the Soviet Union, whom they perceive as attempting to encircle China through Vietnam. Both Mao and Deng were fully on board with it.

We only didn’t criticize China because it ends up becoming very successful and reaping quite a lot of benefit out of it (and part of the reason why China isn’t going to give up the status quo anytime soon), but when other countries try to play the same game, they get labeled as compradors.

This. At this point, Russia taking Ukraine simply means that the European leaders can scaremonger their people into accepting the austerity and fascism even more easily. All in the name of preventing Russian threat, while the capitalists profit from it.

They know that Russia has no interest nor is it capable of invading Europe, but the people would be scared enough into accepting the hardship they’d have to undertake to stop Putin’s madness.

It is true that the euro is extremely poorly designed. No argument against that.

However it still pisses the US off that the Europeans were able to take advantage of the Soviet assets to turn itself into an economic powerhouse that could at least, tilt the balance of power in the grand scheme of things.

For example, if the EU were to stand behind China, then the US would be under even more threat. This is why the Ukraine war has to happen, to sink the euro as a potential alternative to the dollar, and their way of preventing backstabbing by the Europeans is to ensure that the Europeans do not have the means of doing so.

Their solutions come almost entirely from the neoliberal toolkit. That’s what they know, and they are trying to solve it the neoliberal way.

But in what way was the destruction of Europe help the health of the empire in the long run? Obviously American capitalists are all about it in the short term, but it weakens the overall position of the empire relative to China, which is far more significant geopolitically.

The EU has been the true challenger to American capitalism since its formation in the 1990s. When the Soviet Union dissolved in 1991, because its economy was never financialized, the American and European capitalists had been able to harvest their industrial assets and monetized them.

The amount of finance capital generated from monetizing Soviet industrial assets was so vast that it instantly allowed the US and the EU to “hyperleap” into fully neoliberalized economy, and the EU was born in 1993. The creation of euro would soon follow and officially adopted in 1999.

Since then, the euro has emerged as a challenger to dethrone the dollar. It is no coincidence that the Balkan conflicts started as soon as the EU was formed, to keep the EU to spend on militarization. It is also no coincidence that when Saddam wanted to sell his oil in euro, Iraq was immediately invaded in 2003. It is also unlikely to be a coincidence that as soon as Nord Stream was built, the Ukrainian fascist coup and civil war took place in late 2013. Finally, when Nord Stream 2 was completed, the current Russia-Ukraine war happened.

The goal of the US finance capital has always been to kill the euro. This is why the Russia-Ukraine war has to happen:

As you can see, Chinese yuan poses little to no threat to the US. In fact, China has repeatedly stated that they are not interested in anything other than the status quo, which is to preserve the dollar hegemony that has benefited its economy so much.

This is also why after the Ukraine war, when Putin was rallying other countries and calling to de-dollarize, China (and Xi) has been unusually quiet about it. Because why should they?

If the Ukraine war and the $300 billion confiscation of Russian foreign reserves cannot make China give up the dollar, then Trump’s trade war has even smaller chance of doing so.

The PRC and BRICS bank are increasingly more important to the financial backing of the third world while the imperialist financial systems continue to lose their group.

This changes nothing, because China has been very reluctant to internationalize the RMB to preserve its export advantage. It doesn’t want others to hold Chinese yuan as a savings currency, and they’re more than happy to let the dollar play that role.

What has been happening with BRICS are countries starting to adopt bilateral/multilateral currency trade to reduce exposure of their dollar reserves from being confiscated by the US. This is more of a protective measure than de-dollarization, which I have explained again and again, that it can only happen at the real production/trade level i.e. China importing goods and replacing the role of the US as a net importer.

In the same vein, when saving, these countries will still swap the foreign currencies into USD through the forex market.

I’ll give you an example: after the Ukraine war erupted, Russia who was cut off from the dollar began to sell large quantity of oil to India, and accumulated a vast amount of Indian rupees. However, Russia soon realized that it cannot use those rupees at all, because after accounting for importing goods from India, there is nothing else for it to do.

Russia cannot sell rupee to buy Chinese yuan so they can use them to purchase Chinese goods, because the Indian central bank would not allow it as it will fuck with their exchange rate. And the forex market isn’t interested in holding rupee and trading away their yuan, at least not at a price favorable to them. As a result, Russia was forced to hold all the rupees they cannot use while sending away valuable commodities e.g. oil to India, practically for free.

The problem for most countries is that nobody wants to accumulate their currencies. The US dollar does not care though. You are free to use the dollar to do whatever you want: buy Chinese yuan, Indian rupee, gold, crypto, anything that people are willing to sell in exchange for the US dollar. And this is why the dollar is the global reserve currency, not the yuan or the rupee.

The problem for Russia is that it has been shut out from accessing the dollar, but for other countries, they will still buy the USD. This is why the foreign holder of US treasuries has increased in spite of Trump’s debacle, simply that it has switched hands - the Chinese no longer hold as much treasuries, and the money ended up in the UK, Japan and the Cayman Islands end up buying those treasuries. Everything has to balance out.

Sorry for not putting up a source because it is such a matter of fact in China that everyone already accepts as a given.

Here’s an article about it: https://www.sohu.com/a/286706975_175523 (use machine translation)

My friend, mercantilism is like the oldest trick in economic warfare.

First of all, you need to understand that the only reason we have cheap goods today is because the world has a surplus of industrial capacity. If the world’s demand is larger than the supply of goods, then prices will rise globally, and Western countries would not enjoy cheap goods at all.

For the past 50 years, many developing countries have listened to the IMF (and under the coercion by World Bank and GATT/WTO) and oriented their economy into the infamous “export-led growth” model. Instead of investing in their own domestic wellbeing, they allocated significant share of the labor and resources into producing export goods. They were being told that to become a “high income country”, you have to “balance your budget” and be a fiscally responsible kid, and that means earning as much trade surplus as possible to cover up your budget deficit.

This allowed the US to enjoy the benefits simply by running a large trade deficit and turning itself into a major source of consumption to absorb the surplus exports from the rest of the world. The developing countries, on the other hand, rely on export revenues to invest domestically, and it is this constant source of consumption demand that keeps their factories running, their workers employed etc. Meanwhile, the developing countries compete with one another, by depressing wages, depreciating their own currency exchange rate etc. to maintain a competitive advantage in the export sector.

The end result is that we have an oversupply of cheap goods, where the excess is absorbed by the US running a permanent trade deficit.

Now that the US suddenly wants to impose global tariffs, and most of all, on China. What does that mean?

It will mean prices increasing in the US and American consumers purchase less goods. The share of global consumption suddenly shrinks, we now have an even more over-supply of goods against a shrinking share of consumers. Most importantly, it shuts Chinese exporters out of the American consumer market. As a result, China has to dump their cheap goods elsewhere or else their manufacturing sector will go into slump, and unemployment will rise. This is also a very bad timing for China because of the recent pandemic, and the property market imploding also means many people are less likely to spend as their savings dwindle, and the local governments facing a debt crisis since they could no longer leverage the rising land price to pay off the huge amount of debt taken out for infrastructure building.

So somebody else has to buy China’s huge surplus of goods originally intended for the Americans. Naturally, they dump the goods into Europe, which will kill off the European domestic industries because the Europeans simply cannot compete with the cheap and perhaps even superior Chinese goods, if they don’t also put up tariffs like the Americans. This is why the EU put up tariffs against Chinese EV last year as soon as Biden did so.

On the other hand, if they refuse Chinese goods, they will also run into problems with importing critical materials for their own industries. The rare earth export restriction was just such a reminder to them. But worse of all, reduced Chinese imports from the EU means a surplus of export goods that cannot be sold elsewhere, and the European factories will have to close down and layoff their workers, leading to a recession.

This is why EU has no choice but to fold, especially with their energy prices jacked up after the Nord Stream bombing.

And this is why Trump’s tariff is a financial warfare, where failing businesses prime them to be harvested by the American finance capital. If this situation is not resolved in some ways, we could be looking at mass IMF bailouts in the Global South at a scale not seen before.

There is no re-industrialization, despite what Trump says! The guy leading Trump’s “trade war” is Scott Bessent, who was responsible for the 1997 Asian Financial Crisis. This is a finance guy doing finance thing. I’ve written about this in a previous comment on the very interesting history of Southeast Asia.

The only way out is for China to start importing from the Global South countries, and that means China has to start raising wages (by a lot) for its working class and give up its net exporter status.

You misunderstood what Yu Yongding was saying. He was criticizing the neoliberal-centric solution to underconsumption which is to fuel more consumer lending. For example, the Chinese government is loosing restrictions on consumer lending on the grounds that “our household debt level is still not as high as the US and Japan!” as well as loosening the RRR to promote more commercial bank lending.

In fact, this is exactly what Western neoclassical economists want China to do when they say China has a consumption problem, which will only benefit the banking sector.

I am 100% behind investment on high tech economy, but we shouldn’t have to do this by sacrificing the welfare of the people. Can you give a reason why the Chinese working class should suffer from more working hours, higher retirement age, and depressed wages?

More investment isn’t going to solve that problem. The main problem is wealth inequality, and only by raising the wages of the working people can we work toward solving that. An over-supply of goods when the people are too poor to afford isn’t going to work, and will only increase reliance on the export sector because you now simply shift the consumption part to foreigners.

What I am proposing, from a Marx/MMT-centric view, is for the government to directly increase the wages of the working people, so that they have the purchasing power to directly consume the goods produced domestically, and even import from the other developing countries to help grow their economies. More importantly, this actually reduces wealth inequality because the Chinese economy has been structurally primed for the wealth to flow to the top.

This is a completely different model from the US credit-fueled consumption economy.

You`re welcome to link any other actual Marxists and their takes on China which btw I've never seen you actually do. This is an ideological battle in China, not just of good vs bad intentions.

I have literally posted graphs to explain my arguments lol!

I have also said before that my views are heavily influenced by Zuo Da Pei (左大培) and Jia Genliang (贾根良), who are actual Marxist economists and the latter also has the advantage of understanding MMT and List, which means you not only understand class dynamics (Marx), but also finance (MMT) and international trade (List) covering each other’s blind spots.

Roberts likes to show some graphs about Chinese consumption rising over the years without taking into account the role of debt. This kind of superficial view of the Chinese economy completely fails to capture the complexity of the many moving parts under the hood. This is no different than the Bidenomics people showing how the US GDP has grown so much while failing to address the fact that most of the consumption share in the US was contributed by the top 10%.

Household debt leverage of US vs China vs Japan (debt to disposable income ratio)

US = purple, China = red, Japan = brown

Notice that China’s household debt leverage had exceeded that of US and Japan around 2018-2019.

So, there is nothing unusual about China’s increasing consumption when people can afford to take on more debt i.e. when the economy is going well. However, with exports being stifled by potential tariffs, when over-investments in property market imploding, with local governments saddled with unprecedented debt, it becomes inevitable that consumption becomes the only channel for where the economy must flow (if you’ve been reading anything I’ve written before, you know the drill).

Most importantly, Roberts’s argument that China has no consumption problem cannot explain why there is a deflationary spiral in China. This is a serious issue because many businesses in China that have taken out big loans are getting squashed by the deflation. Roberts completely ignored this part as though there is no debt problem faced by the Chinese business.

While I don’t pretend to be able to fully address all these problems, my model that takes into account many of these moving parts can at least explain the deflation problem, why (over-)investment in industrial capacity has failed to translate into wage growth for the Chinese working class, why the Chinese leadership does not simply stop exporting to the US but to seek a trade truce with Trump, because China cannot afford the inflation to rise in the US.

Trump’s global tariff is not a trade war, it is financial warfare.

Look at the trade balance between China and the EU:

I wrote this before:

As both export and import with the US have declined, China’s export to the EU has increased by 6.4% yoy and its import from the EU has decreased by 7.3% yoy!

That means Chinese exporters are channeling their goods to Europe, which will of course lead to a mercantilist fight where the European industries will now have to fight against cheap (and perhaps even superior) Chinese goods coming into their countries.

Meanwhile, China has reduced its import from the EU (likely because of the consumption slump and that China has been able to replace many products that once they could only obtain from the EU, like high end cars), and this will put pressure on the European exporters as they lose their income.

All of this is causing the EU to become even more desperate to secure a deal with Trump, since the European exporters are being squeezed to death by both the US tariffs and cheap imports from China. They will have to give Trump some really good deal, hoping to offset some of their losses. I suspect this is the true goal of the tariff war with China.

As expected, the EU is already folding: EU to Accept Trump Universal Tariff But Seeks Key Exemptions

The European Union is willing to accept a trade arrangement with the US that includes a 10% universal tariff on many of the bloc’s exports, but wants the US to commit to lower rates than that on key sectors such as pharmaceuticals, alcohol, semiconductors and commercial aircraft.

The EU is also pushing the US for quotas and exemptions to effectively lower Washington’s 25% tariff on automobiles and car parts as well as its 50% tariff on steel and aluminum, according to people familiar with the matter.

The European Commission, which handles trade matters for the EU, views this arrangement as slightly favoring the US but still something it could agree to, said the people, who spoke on the condition of anonymity.

They have no choice but to get a deal from Trump. That’s the true goal of Trump’s tariffs against China - to leverage China’s massive industrial capacity to destroy the other export economies so they are forced to enter a deal with the US - the only country that freely runs a trade deficit to absorb their export goods.

This is also why I keep saying that China has to give up its net exporter status if it really wants to fight the US financial war.

Guaranteed housing has not been a thing since 1998. The end of an era.

Young people these days only hear of this as some sort of a mythical past when you talk to them about this lol.