China Is Quietly Reshaping the World

I am curious about the prevailing fetish for adopting a hyper critical stance towards China&#x27;s growth rate. Is it just me, or does it seem that when articles are posted portaying China in a positive light, the immediate tendency is to adopt a critical or skeptical stance? Of course a certain amount of skepticism is warranted, but I feel that these criticisms take on a bit more of a personal tinge, as if there is something ominous or threatening about China&#x27;s growing economic influence.<p>If you feel threatened by the idea of a China that economically dominates, I would honestly like to hear your explanation. Or if your skepticism is ideological e.g., a general belief that undemocratic societies cannot prosper economically, I&#x27;d be curious about that as well.

This is just another way to keep GDP growth up by boosting spending. Basically there are a few policies that the Chinese are pursing:<p>1. Conquering the industries that they are lagging in(i.e auto and semiconductor) by disguising govt subsides as state &quot;support&quot; and flouting WTO rules[1].<p>2. Spend money on belt and road thingy to prop up GDP because there is no more to spend on existing overheated asset bubbles.<p>Remember all those years of propping up GDP in construction projects, where the interest on debt(and the debt itself too) becomes too large a portion of the GDP such that most of it goes to just servicing the debt. Ultimately you want consumer spending and standard of living to grow in lock step but it does not[2].<p>But ultimately with extra spending and little growth they will keep running against fundamental issues like the Impossible Trinity[3] which is like the CAP theorem of macro economics. Unless the economy balances spending and real growth, and if it does not the only Q is when will it burst or become like Japan&#x27;s decades of stagnation.<p>[1]<a href="https:&#x2F;&#x2F;www.economist.com&#x2F;news&#x2F;finance-and-economics&#x2F;21729442-its-record-industrial-policy-successes-patchy-china-sets-its-sights" rel="nofollow">https:&#x2F;&#x2F;www.economist.com&#x2F;news&#x2F;finance-and-economics&#x2F;2172944...</a> [2] <a href="http:&#x2F;&#x2F;carnegieendowment.org&#x2F;chinafinancialmarkets&#x2F;72997" rel="nofollow">http:&#x2F;&#x2F;carnegieendowment.org&#x2F;chinafinancialmarkets&#x2F;72997</a> [3]<a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Impossible_trinity" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Impossible_trinity</a>

Annoying quibble about the author&#x27;s carelessness: there&#x27;s an article from the Economist that this sentence is linked to.<p>&quot;Scholars who looked at Chinese investment in Africa from 1991 to 2010 found that Chinese assistance does not appear to help economic growth...&quot;<p>However, the article linked is actually about Chinese government assistance in Pakistan (not Africa) and the impact on Pakistan&#x27;s relationship with India -- not about Chinese private investment at all, nor about Africa.<p>&gt;_&gt;

&quot;secure the natural resources it needs to grow&quot;<p>This gets repeated a lot. Maybe Chinese propaganda make this point to justify its outward investments to the Chinese people. Statements like this then take on a sinister sheen when discussed in the West.<p>Commodities are fungible and China is rich in natural resources itself. Oil is the one thing it is insecure about yet the insecurity is much more about a potential blockade in time of conflict than insufficiency of suppliers. Yes it has interests to see more supplies so it certainly would encourage investments in natural resources but to control the resources? That doesn&#x27;t even make sense in the modern (WTO) context. It can&#x27;t even control rare earth exports when 90% of the supply is based inside China, how can it expect to control supplies outside of China?<p>China has a high savings rate and runs a trade surplus and by necessity it will export capital. There is no other way around it. The Chinese government right now finds it more attractive investing in overseas infrastructures than buying more US Treasury bills.

The amount of comments on this article that are emotion and fear-based, rather than fact and experience-based is surprising for HN.

Not mentioned in the article is China&#x27;s desire to develop the western areas of the country, which benefit from Belt and Road.<p>To manufacture a product in Hebei and ship it from Tianjin, or manufacture in Jiangsu and ship from Shanghai&#x2F;Ningbo, or manufacture in Guangdong and ship from Shenzhen, is pretty cheap.<p>To do the same in western provinces is much harder. There&#x27;s a big regional disparency. While China&#x27;s landmass goes far west, (western) Sichuan, Tibet, Xinjiang, Qinghai, the western provinces I mean are the shanxis, gansu, sichuan, yunan with large population bases.<p>Myanmar was also not mentioned in the article, but will also play an important role as support to southwestern China&#x27;s access to the ocean.

I might be wrong but didn&#x27;t something similar happen with Japan too? After the rise of their industrial power they started expanding outside, buying&#x2F;investing in stuff outside their country in accordance to the BoJ guidance also known as &quot;window guidance&quot;. But then the asset bubble burst causing issues for their economy.<p>Chinese loans seem to be on the rise: <a href="https:&#x2F;&#x2F;www.reuters.com&#x2F;article&#x2F;china-economy-loans&#x2F;rpt-update-2-china-new-yuan-loans-rise-more-than-expected-in-september-idUSL4N1MR15L" rel="nofollow">https:&#x2F;&#x2F;www.reuters.com&#x2F;article&#x2F;china-economy-loans&#x2F;rpt-upda...</a><p>So, will something similar happen here too?

&quot;most of its largesse comes as loans&quot;<p>These investments are not really Chinese government&#x27;s money to give unless it wants to tax its people more. What Chinese government has is a very large sway over where Chinese external investments go since it requires exporters to sell their forex earnings and large outward investments require state approvals. But these investments are not taken from depositors as a tax. The depositors still have claims on the Chinese banks. What the Chinese government&#x2F;banks do is really to provide a guarantee to the domestic depositors as intermediaries. If the investments go bad they will have to plug the financial hole somehow.

Really interesting article. A couple of comments. Investing in foreign infrastructure and trade is good, as the article itself says, also because it creates a disincentive for war. But we need to keep in mind that economic interest isn&#x27;t enough to prevent war; before WWI lots of people thought that a new war in Europe was unthinkable, considering the interdependence of Europe economies at the time and how much everybody had to lose with a war. It didn&#x27;t matter.<p>Another very important point IMHO is that the end result of this will depend a lot on how productive will these investments turn out to be; will they create good returns or not? If returns are good, they will create wealth and everybody will probably be happy in the end. If returns will be poor, I&#x27;m afraid they could end up creating very big tensions in the future between China and the countries that are getting indebted now.

Too many loans, they&#x27;ll probably fail big and it will be a bang...<p>But it is impressive though, I just can&#x27;t believe they will actually achieve it. Already done internal loaners are failing and they are holding back European expansion ( Chinese firms) on command of the Chinese government.<p>But as usual, we will see

The internet will go crazy over China now, mostly of which will be:<p>1. Abuse human rights.<p>2. A dictatorship.<p>3. South China sea.<p>But the internet will happily use &quot;Made in China&quot; shamelessly. Hypocrisy at its best.<p>The internet being the western majority crowd who have never seen a world outside of their state.<p>As seen on youtube<p>&quot; Do you support Iraq war&quot;<p>Yeah absolutely. They have WMD.<p>Show me where Iraq is on this map.<p>Points to Madagascar.

&quot;Supreme excellence consists on breaking the enemy&#x27;s resistance without fighting.&quot; - Sun Tzu

Wow those numbers are staggering... Staggeringly small compared to US&#x27;s budget for the War(s) on Terror, that is.

China is destroying the world. The amount of ecological damage they do OUTSIDE their own country is staggering.