This couldn’t explain it more perfectly. Once any empire goes from net creditor to net debtor, forget it, you’ve got no leverage, and no empire anymore. Somehow I don’t see how leaders in the US didn’t catch onto this.
There are Russian “experts” gleefully predicting the collapse of the U.S., and our fragmentation into 6 or 7 pieces. It’s usually silly to make that kind of dire prediction, and I’d be astonished if China were in danger of imminent “collapse.”
But it’s useful for people to read what Mr. Chanos has to say, because China has a host of real, serious, structural problems. China’s development has been a marvel to behold, and their achievements are often breathtaking. But it’s a mistake to assume their growth can continue unabated. Among their many problems:
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They’re getting old almost as fast as they’re getting rich.
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The Chicom government has long had an unwritten agrement with the people: “We’ll give you greater prosperity than you’ve ever had before if you don’t question our absolute power.” What happens to than unspoken agreement when inevitable economic downturns occur?
Exactly.
-XT
It ain’t gonna happen in 20 years.
What’s next weeks lottery ticket winning number in New Mexico again? I could use the cash…
-XT
their population demographics in terms of age cohorts are no different than ours.
why would i tell you? 
but, apparently since you’re able to predict economic wall-hitting with great certainty, maybe you can tell me some good stuff that will make me rich about various economies around the world and possibly a few Fortune 500s?
As you say…why would I tell you? 
-XT
well i’m not out here spewing nonsense about my prescience
No, just making terse assertions that seem to be coming from your neither regions. Well, and saying ‘fuck’ a lot, which undoubtedly gives your words that much more weight.
-XT
I used to work in the International Treasury organization for a very large multinational company. We did a LOT of business in China. You’d know our name.
Please see page 7 of the cite above. And that’s just the “rules”. Except the rules tend to have as much solidity as wet sand. Getting the PROPER paperwork to get a dividend for cash repatriation for a foreign investor is a challenge. Contracts that you thought you’d agreed to change due to “new translations”. There are armys of people involved in these transactions and take months or years to complete.
This is a huge challenge for companies, and it figures into part of the investment return equation. What you make in profit /= what you ultimately get out in hard cash at the end of the day… or even years later.
You cannot IMAGINE the pain that can come for getting money out of these countries - even other growth spots like India.
They used to be a Red Menace and somebody we had to be scared of and prepared for a war with. Now that they accept private investment the same regime is just fine. Every now and then the paranoid right of the US political spectrum, the people who brought you the Iraq war and the preemptive waar doctrine, will crank up the fear about the Menace again and how threatening they are to our freedoms for various domestic political purposes but China already won the war without lifting a finger. Due to the idiots running America they’re now America’s reserve banker and can fuck America upside down without firing a shot whenever they feel like it.
We’re playing checkers and they’re playing chess. The US/other developed nation globalisation proponents allowing western companies to offshore everything to China and other bowl-of-rice-a-day wage countries in general only think as far ahead as the end of the next financial quarter. China don’t. They patiently waited a hundred years for Britain to hand them Asia’s biggest trading and financial centre on a silver platter. They’ll patiently wait a hundred years for Taiwan to vote for itself to be reabsorbed by the Chinese mainland, something to bear in mind in future when you see Bill Kristol and the rest of the nutjobs jumping up and down demanding an instant war the next time there’s a bit of geopolitical tension over it. They spent a thousand years building a Wall. The Chinese are long term planners.
When you’re the world’s top dog and you’ve got the global economic and geopolitical mojo, the one thing your leaders have a duty to do is to keep the status quo for as long as possible, to benefit as many generations of your country as possible and leave your country in the strongest position possible when you do get overtaken. Our lot seem intent on pissing everything up the wall as quickly as possible, but look at this quarter’s profit increase!
As for how fast they and/or others will blow past us, consider how our respective countries deal with people who screw things up.
BEIJING (Reuters) - China on Tuesday executed a former securities trader for embezzlement, the first person in the industry to be put to death, but millions of yuan are still missing, a state newspaper said.
Yang Yanming was sentenced to death in late 2005 and took the secret of the whereabouts of 65 million yuan ($9.52 million) of the misappropriated funds to his grave, the Beijing Evening News said.
Over here he’d get a government bailout and a Presidential Medal of Freedom. On one side you’ve got a ruthless machine where the penalty for screwing up, even avoiding paying taxes, is execution. On the other side you’ve got a seething mass of corruption where the legislative system and the governing administration is bought and paid for by the country’s biggest criminals.
Ah… so, you think China can bring in immigrants to replace their old folks, the way we have?
Good luck trying to turn Filipinos or Mexicans into Chinese.
They’ll just relax the one child per family rule. Getting older is the least of China’s problems.
au contraire. There was a massive population explosion under Mao after the revolution through the late 1970’s. Then switched to the one child policy (sorta). There is no real immigration.
How is rhis like the US of A? Do a search on Chinese populatiion growth and look at the greying population issue.
There’s no “rule” against having large families in Japan or South Korea, but nobody THERE has any kids, either.
It’s utterly wrong to suggest their population will boom again if they just ease up on regulations a bit. Asian women no longer HAVE to churn out babies and very few of them want to.
China’s economic growth is fueled in large part by it’s huge population. They can expend this to provide work and to provide a market. But it only goes so far. Even a 10% middle class of China would be a population greater than Japan.
Similar situtation with India.
But China and India in addition to growth will have to deal with huge populations of desperately poor people. Both countries have twice the population of the USA living in poverty. For example WHO estimates 75% of the population of both India and China are infected with latent TB.
So is China going to collapse, perhaps, but more likely as the growth grows it will slow and China will be forced to deal with it’s poor people and that will start to drag the economy down quickly
I wouldn’t say utterly wrong. Countries like Japan don’t have a one child rule because they didn’t have a population growth problem, China did. If they relax the law population growth is only going to increase, maybe not as much as China needs to avoid a demographic problem but they’d still be in a much better demographic situation than countries like Russia and parts of Europe. Any future shortages of working-age people can be solved with immigration like other countries do. “Solved” is probably the wrong word, maybe alleviated.
One issue that popped up in the media about a year or two ago was riots due to corruption in China. This is a side effect of the “do as we say and ask no questions” model. Some greedy insiders will exploit connections to rip people off; and then rely on payoffs and the party closing ranks to prevent facing the music.
If the central government can keep a lid on corruption (shooting the most obvious offenders - in public - helps), then they will stifle dissent. Unfortunately, without freedon to complain and be critical, these complaints did not manifest themselves until the situation was so out of hand that the army had to help the police put down rioting. Also, in a country where nobody believes the official media for good reason, the rumour mill runs rampant and feeds unrest, as happened in the far west a few months ago.
OTOH, release the reins too much and the criticism will get out of hand. It’s a very fine line the government needs to walk, or else…
Sounds like the US in that respect to me…