[bochen777]

Ever since WWII the US Petrodollar hegemony has reigned supreme. In 2014 China's GDP PPP surpassed the USA for the very first time, something that has never happened before. Back during the height of the Japanese economy of the late 1980's Japan peaked at around 40% to 60% of US GDP and was more or less compelled into signing the Plaza Accord which many agree lead to its 4 decades of lost growth etc. It doesn't appear Xi/China will follow in Japan's footsteps in terms of acquiescing to a trade deal that gives America full advantage without a fight for equality and mutual respect etc. For one thing China is a much bigger country with far more land and people and it doesn't host US troops and is not a vassal of the US Empire. The other fact is Japan never surpassed USA GDP PPP whilst China has broken that threshold back in 2014...

Trump's trade war is really about decoupling America from China as a means to contain China's continued rise. To their thinking, if things were let to play out under current status quo, it won't be long given current trends before China surpassess America as the world's dominant superpower. So given this perspective, to the US it would be better to cut all ties now, while the US is still technologically and militaristically ahead, than to continue business as usual and lead to the inevitable outcome of being supplanted as world #1 spot...

From China's perspective it realizes that America -- as the decling power -- has no intention of ever giving up the top spot and will do whatever it takes to contain or even reverse the rise of China... From the Chinese perspective One Belt One Road and Made in China 2025 are vital strategic projects to help ween it off American dependence/reliance and to create a new world order by ushering in a silk road 2.0 to bypass the need to confront the US blue water navy as America will try to blockage China's shipping routes etc during any time of tension or war...

For both sides there is this sort of "inflection point" and no one wants to lose the initiative, if China wants to ever become #1 it is now or never, no longer is valid the Deng doctrine of "bid your time", since America has in the last few years awakened to the fact that China may soon overtake it, so China's goal is to act fast and erode the US Petrodollar hegemony replacing it with its own BRI/OBOR/MIC2025 before America can fully cap its rise and ascendsion....

For the US, its goal is to decouple quickly enough from China, and to asymettrically target and destroy any tip of the spear Chinese companies/projects/tech such as the Huawei, 5G, DJI, EV, trains, etc etc to cripple China's plans to move up the value chain and hi-tech-ify its economy and to do so with enough force to set back China and permanently prevent it from successfully climbing the arch trajectory of replacing the US.

How will this most likely play out?

[GHung]

$this->bbcode_second_pass_quote('', ' ')...... China's plans to move up the value chain and hi-tech-ify its economy and to do so with enough force to set back China and permanently prevent it from successfully climbing the arch trajectory of replacing the US.

[Outcast_Searcher]

1). Clearly China will replace the US as the global dominant country in time. Numbers don't lie. Also, cultural differences like having most of the political leaders be engineers, etc. instead of lawyers is, IMO, an indication of a much smarter way of thinking, which helps make China's rise in power over time more certain, IMO.

It's demographics and math. To deny it is like denying science.

2). The whole worry about whether the global trading currency is the dollar or something else (including a supranational currency composed of some combination of national currencies) is completely irrelevant in the modern world.

The global FX markets trade a good $5 TRILLION on average daily. Any entity with financial means and a brain can construct/trade/hold ANY portfolio of currencies, long or short they want.

This is NOT the 70's, before fast reliable computers on a huge global network. All the harping on the petrodollar's demise meaning doom or even a meaningful issue for the US is as misplaced as all the other fast crash doomer nonsense, with a track record of roughly zero accuracy for several decades (as long as I've been paying any attention).

[bochen777]

In an escalated Trade War China can ban rare earth exports to the US. This would cause some pain for America but it would be a single use tactic for the Chinese. Trump is wanting to buy Greenland for this exact reason.

Look at the Huawei issue, Huawei is a 'national security' threat to the US but not because of spying. Its more of the fact that if Huawei becomes #1 smartphone maker and also the #1 deployer of 5G/6G etc, it corners the telecommunications market and puts the US at a strategic intelligence disadvantage as well as an economic value chain disadvantage. It is about marketshare and hegemony.

China's fab is still years behind the US or the Taiwan TSMC... so even though Huawei says they design their own chips, it is still based on ARM and still fabbed by TSMC. US could tell Intel to stop shipping CPUs to China and that would cripple the nation to a large degree, perhaps more so than an rare earth ban would impact the US.

And then there is wildcards like AI, quantum computing, peak oil / deminishing eroei..... if AI doesn't progress as fast as people hope and if Peak Oil is real, then it would be a brutal zero sum game and a sort of fight to the death mad max style between the world's powers...

[Newfie]

I don’t think it is all so simple.

The USA’s rise to power was due to a vast store of untapped resources, a very large country/population compare to then rivals, and those rivals going to war with one another.

China does not have this pool of untapped resources. It has a large population but is struggling hard to feed them. Even if China feeds itself from alternative sources the price of cereals will rise putting pressure on China and bolstering the USA.

The World is largely at peace, lots of little conflicts but the USA is in no major battle.

I acknowledge that there are forces promoting China. I’m far from certain it will actually take over. And besides India has their own ideas which won’t favor China.

[ralfy]

It's not just decoupling from China but facing the effects of such on the dollar as a reserve currency.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('bochen777', 'I')n an escalated Trade War China can ban rare earth exports to the US. This would cause some pain for America but it would be a single use tactic for the Chinese. Trump is wanting to buy Greenland for this exact reason.

...

And then there is wildcards like AI, quantum computing, peak oil / deminishing eroei..... if AI doesn't progress as fast as people hope and if Peak Oil is real, then it would be a brutal zero sum game and a sort of fight to the death mad max style between the world's powers...

[Outcast_Searcher]

$this->bbcode_second_pass_quote('ralfy', 'I')t's not just decoupling from China but facing the effects of such on the dollar as a reserve currency.

[bochen777]

Lets say you flip houses to make more money in a good era condusive to such real estate entrepaneuership things, you start small but then grow larger and pretty soon you amass dozens of houses for rentals and it all snowballs and accumulates.. eventually you saturate the market and become a victim of your own success as continued perpetual growth is impossible in a finite environment as is the notion that such business plan is scale invariant or that it always scales up forever...

The FX markets etc that you talks about is fine at the level of individual investors, funds, copmanies and even larger scale congolmerates... but at the scale of the nation state it is entirely different altogether when applying it to somehow dispel the notion of the geopolitical and macroeconomic impact of America losings it petrodollar hegemony... Its the same reason that hypothetically you could be the best stock market trader in the world, much better than Warren Buffet etc but eventually you will grow too big to continue to make the sort of % returns that you started out with when smaller...

The dollar is like a platform that America exclusively controls via the right to sanction others (backed by the force of its strong military) and the exclusive right to print/mint dollars/digits via Fed/Quantitative Easing etc... It is a double edged sword that on one hand America forces others to use the dollar else regieme change (Saddam, Iran, Venezula etc) and on the other hand it enables America to economically cripple nations that don't kowtow to them by applying direct and secondary sanctions against them. (often making the arguement that these sanctioned nations have unlawfully used American owned financial instruments (aka US dollar) in their dealings/trade with other nations and hence these nations should be 'reigeme changed' and also collaterially threatening other nations that dare trade with them or go against the US sanctions) The kidnapping of the Huawei CFO was based on the grounds that Huawei did business with Iran using dollars, and the pushback against China for continuing to buy oil from the US sanctioned Iran is also because it involves trade with Dollars. So it allows the US to essentially weaponize the dollar as a means of conducting economic warfare against other nations, not to mention it is a form of global usury as it unlawfully 'taxations' the globe and it dilutes the effects of inflation at home by wiping out the purchasing power of the dollars held/saved by other nations and entities abroad.

[Newfie]

^ Thanks for that description.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('bochen777', '
')The dollar is like a platform that America exclusively controls via the right to sanction others (backed by the force of its strong military) and the exclusive right to print/mint dollars/digits via Fed/Quantitative Easing etc... It is a double edged sword that on one hand America forces others to use the dollar else regieme change (Saddam, Iran, Venezula etc) and on the other hand it enables America to economically cripple nations that don't kowtow to them by applying direct and secondary sanctions against them. (often making the arguement that these sanctioned nations have unlawfully used American owned financial instruments (aka US dollar) in their dealings/trade with other nations and hence these nations should be 'reigeme changed' and also collaterially threatening other nations that dare trade with them or go against the US sanctions) The kidnapping of the Huawei CFO was based on the grounds that Huawei did business with Iran using dollars, and the pushback against China for continuing to buy oil from the US sanctioned Iran is also because it involves trade with Dollars. So it allows the US to essentially weaponize the dollar as a means of conducting economic warfare against other nations, not to mention it is a form of global usury as it unlawfully 'taxations' the globe and it dilutes the effects of inflation at home by wiping out the purchasing power of the dollars held/saved by other nations and entities abroad.

[Zarquon]

$this->bbcode_second_pass_quote('bochen777', 'S')o given this perspective, to the US it would be better to cut all ties now, while the US is still technologically and militaristically ahead, than to continue business as usual and lead to the inevitable outcome of being supplanted as world #1 spot...

For the US, its goal is to decouple quickly enough from China, and to asymettrically target and destroy any tip of the spear Chinese companies/projects/tech such as the Huawei, 5G, DJI, EV, trains, etc etc to cripple China's plans to move up the value chain and hi-tech-ify its economy and to do so with enough force to set back China and permanently prevent it from successfully climbing the arch trajectory of replacing the US.

How will this most likely play out?

[Outcast_Searcher]

$this->bbcode_second_pass_quote('bochen777', 'I')n an escalated Trade War China can ban rare earth exports to the US. This would cause some pain for America but it would be a single use tactic for the Chinese. Trump is wanting to buy Greenland for this exact reason.

[Plantagenet]

This isn't just about China versus the US. Its also about economic competition between the decentralized market oriented capitalistic system of the US versus the centralized state-controlled system of China.

The high degree of control exerted by the Chinese communist party over the companies and economic activity gives China certain advantages. They are capable of conceiving and executing strategic business plans on a country-wide basis to take control various industries and to conduct very focused research in key technologic areas that will give them leadership in key areas of technology going forward.

The US, with its decentralized economic system, has no such strategic plan being executed on a country-wide basis. Instead, the US relies on spontaneous discoveries by universities and small business start-ups to move technology ahead and drive US corporate expansion into new areas. In the 20th century this worked spectacularly well for the US, with start-ups like microsoft, apple, google, netscape, netflix, etc. etc. turning into very very successful corporations.

We'll just have to see how this competion works out in the future. China's centralized government controlled model faces risks because any hyper-centralized system is liable to face problems if the leadership makes bad decisions. And the US decentralized system faces risks because as technologies mature, it is harder and harder for new start-ups to find entirely new areas to build new companies.

Personally, I would bet on the US winning this competition. Centralized systems like China are highly likely to fail because no leadership is capable of making correct decisions forever. A mistake in the US doesn't matter very much because some other corporation or some other politician will step in and compete or change the direction things are going. A mistake in China can be much more serious because there is no way to challenge party leadership or directives, so the mistake can continue to worsen and worsen.

Cheers!

PS: Ultimately the economic competition will be superseded by the sheer need to survive in the face of climate change. China will be very severely affected by climate change because hundreds of millions of Chinese live in low-lying areas on the delta of the Yellow River and other deltas along the east coast of China. Any increase in sea level will fairly quickly produce millions and millions of refugees, severely disrupting the China economy.


Cities like Shanghai and the densely populated river deltas around them are going to flood as sea level rises, resulting in tens of millions of climate refugees in China in coming decades

[Zarquon]

http://www.williamengdahl.com/englishNEO22Oct2019.php

$this->bbcode_second_pass_quote('', '[')b]China’s Hidden Economic Time Bomb
...
China’s turn to what Deng Xiaoping called “Socialism with Chinese Characteristics” after 1979 was in fact a state-controlled turn to western companies and investment to take advantage of China’s seemingly unlimited low cost labor. That labor mostly came from those born prior to 1979, before the One Child Policy. A worker in his mid-20s in 1980 was in his 50s by the time of the 2008-9 crisis in the West. Demographic change is a slow process and could be overlooked in the boom years before 2008. Now, in the past decade, manufacturing wages across China are rising and the population born under the One Child era are notably fewer, adding to recent rising wage pressures.

As China’s manufacturing has moved up the value-added chain as part of its development strategy of Made in China, wages have risen significantly. The Economist Intelligence Unit estimates that from 2013-2020 average manufacturing labor costs have risen on average 12% a year. Today average factory wage costs in China are some three times that of India and far higher than in Indonesia or Vietnam.

At the same time as higher skilled labor is needed for China’s fast-developing manufacturing base, especially under the mandates of the Made in China2025 transformation to a world high-tech economy, the size of the overall workforce, once considered nearly limitless, has begun to decline. China’s labor force peaked in 2015 and has begun shrinking, albeit slowly at first. That decline now is pre-programmed to accelerate as the pre-1979 workforce reaches retirement age and is not replaced in equal numbers after 1979 due to the drastic decline in births. According to Deutsche Bank estimates, the work force will shrink from 911 million in 2015, to 849 million in 2020, and to 782 million in 2030. Barring a dramatic change in birth rates, beginning about 2025 China’s overall population will begin a slow but accelerating decline as well.
...
China is ageing faster than almost any other country because the number of new births has been blocked while those born are living far longer. By 2016 China had the lowest fertility rate in the world—1.05 according to China’s 2016 State Statistical Bureau data. Social changes encourage young women to postpone marriage and pursue careers, while rural practice encourages male over female births, all of which drive fertility rates lower.
...

[EnergyUnlimited]

$this->bbcode_second_pass_quote('Plantagenet', '
')PS: Ultimately the economic competition will be superseded by the sheer need to survive in the face of climate change. China will be very severely affected by climate change because hundreds of millions of Chinese live in low-lying areas on the delta of the Yellow River and other deltas along the east coast of China. Any increase in sea level will fairly quickly produce millions and millions of refugees, severely disrupting the China economy.

[mousepad]

$this->bbcode_second_pass_quote('EnergyUnlimited', '
')Within 20-25 years US will be a predominately Latino country resembling Mexico in its workings. Taste of it can already be seen in California.

[Plantagenet]

$this->bbcode_second_pass_quote('EnergyUnlimited', 'R')ussia, mainly due to rampant alcoholism and abortions, is rapidly depopulating.
Russian Slavic women increasingly prefer Chinese as their husbands because there are better prospects with them.
Chinese were always considering russian Far East to be their own, under temporary russian rule.
So there will be a takeover, a peaceful one indeed, assisted by voluntary russsian suicide.
So Chinese will get *the most valuable lands* from perspective of climate change.
Future is bright for China.
Time to throw a towel and negotiate terms of surrender.
China wins.

[mousepad]

$this->bbcode_second_pass_quote('Plantagenet', '
')the millions of Islamic immigrants that are entering the EU and failing to assimilate.

[Plantagenet]

$this->bbcode_second_pass_quote('mousepad', '')$this->bbcode_second_pass_quote('Plantagenet', '
')the millions of Islamic immigrants that are entering the EU and failing to assimilate.