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China's Rise/ World Ramifications

Discussions about the economic and financial ramifications of PEAK OIL

Re: China's Rise/ World Ramifications

Unread postby AgentR » Mon 17 Aug 2009, 13:06:55

$this->bbcode_second_pass_quote('rangerone314', 'V')ietnam, India, East Turkistan and Tibet might disagree.


Just because some of us nutty Texans might declare our independence from Washington, doesn't change the reality that Texas is part of the USA. China has a bit of a problem in perception in this respect because its previous couple of centuries worked to badly fragment it. Most of the "repair" is complete, but issues remain. I see Tibet and Turk-not-a-stan in this category.

India... I think you are fishing... badly. There are no Chinese troops moving to invade New Delhi. Border disputes and complaints do not for power projection make. Power projection would be putting 100,000 troops and their associated hardware in the middle of the Sudan. Thats not how China does business. Such projections really need to be seen as relics of a passed age that serve their masters very poorly.

Vietnam... Well thats a mess, but its a mess of the West's creation. and again, it falls into the borders category; you can't have stuff going "boom" on your borders and just sit and hope for the best. Internal security requires a response commensurate to the perceived threat; which to China, in Vietnam, the treat was as huge as if the USSR moved a half million troops, missiles, and tanks onto the Mexican border.

$this->bbcode_second_pass_quote('', 'I')t will be interesting in near future when food becomes in issue to see what the Chinese will do when land they own or lease in an African country to grow food on for Chinese is taken back because people in that country are starving too.


Seems clear enough to me, they'll buy grain from US Midwest farmers for rinminbi which will then be used to purchase hummers and pickups from China.
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Re: China's Rise/ World Ramifications

Unread postby rangerone314 » Mon 17 Aug 2009, 14:22:46

$this->bbcode_second_pass_quote('AgentR', 'S')eems clear enough to me, they'll buy grain from US Midwest farmers for rinminbi which will then be used to purchase hummers and pickups from China.


And when oil is $200/bbl how much grain will be produced and how many hummers will Americans drive?

http://en.wikipedia.org/wiki/Sino-Indian_War

http://en.wikipedia.org/wiki/Spratly_Islands

Admittedly the Chinese are less rapacious and agressive than many cultures in Asia: Japan, Mongols, Tartars but that may change when they can't achieve their objectives peacefully due to peak oil.

First re: Sun Tzu they will use diplomacy first and achieve their goals by getting us to screw ourselves (also Mao-"capitalists sell the rope from which they are to be hung") through exporting our technology to them (jet engine & missile technology for example) and also by stealing it from us.

Then they will bleed us in proxy wars, actually they already are by supplying weapons to Iran (that I'm sure they know will get used in Iraq) and Afghanistan.

The 3rd stage would be open conflict, when we've outlived our usefulness and are competing for the same scarce resources.

We are being taken apart like a clock.
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Re: China's Rise/ World Ramifications

Unread postby AgentR » Mon 17 Aug 2009, 14:52:04

$this->bbcode_second_pass_quote('rangerone314', 'A')nd when oil is $200/bbl how much grain will be produced and how many hummers will Americans drive?


As much as now, if not more. $200/bbl isn't even close to what it would take to shut down agricultural production in the midwest.

As to hummers, that was supposed to be a kinda funny contrast against the useful pickup truck also sited.

$this->bbcode_second_pass_quote('', 'h')ttp://en.wikipedia.org/wiki/Sino-Indian_War
http://en.wikipedia.org/wiki/Spratly_Islands


Oh looky. More border disputes. Like I didn't already note them, and explain why border disputes are different from power projection.

$this->bbcode_second_pass_quote('', 'T')hen they will bleed us in proxy wars, actually they already are by supplying weapons to Iran (that I'm sure they know will get used in Iraq) and Afghanistan.


"bleed us" is definitely an overstatement, since Americans seem to love the heck out of these adventures. How many hours of smart bomb camera footage have been run on various cable entertainment channels? It boggles the mind.

Your sentence suggests that these supplies are being given; instead of bought btw; and while I am not privy to Chinese government military contracts (!); I think its fair to say that they are selling weaponry, just like we sell weaponry, and the Russians sell weaponry, and the French sell weaponry, and th British sell weaponry. Its called commerce. People like to buy stuff that goes BOOM.

$this->bbcode_second_pass_quote('', 'T')he 3rd stage would be open conflict, when we've outlived our usefulness and are competing for the same scarce resources.


Two real problems with this final assertion..

China is just too close to many of the sources to be competed against in such a scenario; the US wins over there now, simply because we spend untold thousands on every soldier deployed, against a brain damaged and broken enemy more interested in flashy statements than military victory. Now imagine if China decided to deploy and take Afghanistan and Iran militarily. It wouldn't even be contested by the US; excuses and rationalizations would be made, commerce would continue, and there'd be a bunch of dead Iranians, which Americans would no doubt quietly cheer about anyway.

Second problem is really internal US capacity. While it is no where near enough to support our luxurious gluttony as of present; there is more than enough to sustain an industrial nation and its military for just about as long as there will be oil for anyone. And thats enough to turn the puzzle on the other end; it'd be too expensive for China to land troops within the US, Mexico, or Canada.

Never assert that the expensive way is THE way, when cheaper ways that accomplish the same are, and will be, apparent to all.

China will get its share of mideast oil; and they'll win it with rinminbi, no bullets necessary.
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Re: China's Rise/ World Ramifications

Unread postby SeaGypsy » Mon 17 Aug 2009, 18:58:35

Is anyone suggesting China is a direct threat militarily to fhe USA? I'm out of touch with US media these days, but I suspect many Americans would prefer direct war to death by attrition?
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Re: China's Rise/ World Ramifications

Unread postby americandream » Mon 17 Aug 2009, 23:18:43

$this->bbcode_second_pass_quote('SeaGypsy', 'B')eing an American born dual national Australian, I have copped shite all my life from the Uncle end about my insistence that Australia was going to outlive the USA in lifestyle terms; for a very long time.
My basis for this assertion was that Australia is perfectly placed to take advantage of the virtually unstoppable rise
of China.

The USA has been poised to become a resource importer to an exponential extent, simultaneously losing any tech advantage over it's competitors and long since having lost any productivity advantage in real cost terms.

The final battle between the great hegemonies is taking a very interesting tone, not least philosophicly
.
Beware , my American brothers and sisters, there are some lethally clever business people in South East Asia.
Between Australian and African resources, Chinese ingenuity, hard work for 'peanuts'; you guys are in some serious shite.

Yeah we are all ultimately in it big time; but not just yet
.
The Chinese are reveling in the idea of everyone having to do business with them on their terms. Not too far away.
What can the USA do?
Compete with the Chinese.
Goodbye workers rights.
Goodbye minimum wage.
Hello workin your backside off for just enough to get by?

Or Goodbye America?


Sigh.

Which America are we referring to?

The owners of capital or the hewers of wood?

The former are nicely ensconced on planet earth. The latter, whether in America, Down Under, Africa, China, India, Pakistan or wherever will do as we are told, work and play in our little sandboxes.

edit: you beat me to it, Gasmon yer Pom. :shock:
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Re: China's Rise/ World Ramifications

Unread postby SeaGypsy » Tue 18 Aug 2009, 05:29:25

Another advantage the Sino's have is their generally happy disposition. Try telling a Chinese with a $5 a day job that they should not be happy. Try telling J6P s/he is only worth that an hour and they should be gratefull.
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Re: China's Rise/ World Ramifications

Unread postby americandream » Tue 18 Aug 2009, 05:42:04

$this->bbcode_second_pass_quote('SeaGypsy', 'A')nother advantage the Sino's have is their generally happy disposition. Try telling a Chinese with a $5 a day job that they should not be happy. Try telling J6P s/he is only worth that an hour and they should be gratefull.


Its all relative.
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Re: China's Rise/ World Ramifications

Unread postby rangerone314 » Tue 18 Aug 2009, 08:01:12

China for all the good they might do, such as leap frogging past some stages of development, development of LED lighting and magleve trains and such, are ultimately going to be co-leaders in the race to the bottom.

That is only the end result.

The great lie in this country is that there is really anything to be done about it. At BEST our standard of living will meet China's halfway eventually... China's standard will go up (but not to our present level) and our standard will go down. That is what would happen WITHOUT peak oil due to the race to the bottom.

Now WITH peak oil, the future will probably be US having the standard of living they have in China now, and the Chinese standard of living being what the standard is in Darfur.
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Re: China's Rise/ World Ramifications

Unread postby rangerone314 » Tue 18 Aug 2009, 08:12:40

$this->bbcode_second_pass_quote('AgentR', 'A')s much as now, if not more. $200/bbl isn't even close to what it would take to shut down agricultural production in the midwest.

What do you think WOULD be enough of a price to shut down agriculture in the midwest? (considering that agriculture does seem to be a rather fragile business to be in)

Most likely BAD scenario would be a Sino-MiddleEastern alliance, China/Iran/Pakistan vs the US that imposes and oil embargo on the US, and possibly results in an assault against the countries that aren't participating (Saudi Arabia, Kuwait). China may even take opportunity to take Taiwan, which they will need in the future if they want to have a true blue water navy.

They have a mockup up in China of the main airport in Taiwan that they practice doing paratrooper assaults on. In a conflict over Taiwan, they now have Russian-made Sovremmny destroyers that are equipped with anti-aircraft carrier Sunburn SSN-22 missiles that skim the sea surface. So no more carriers into the Taiwan straight.

What would the US response be if China backs Iran and Iran rains several hundred missiles down on Ras Tanura oil terminal in Saudi Arabia?
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Re: China's Rise/ World Ramifications

Unread postby AgentR » Tue 18 Aug 2009, 12:58:39

$this->bbcode_second_pass_quote('rangerone314', '')$this->bbcode_second_pass_quote('AgentR', 'A')s much as now, if not more. $200/bbl isn't even close to what it would take to shut down agricultural production in the midwest.

What do you think WOULD be enough of a price to shut down agriculture in the midwest? (considering that agriculture does seem to be a rather fragile business to be in)


My estimate is things get wierd at $1k/bbl; the fragility that we all see currently is a result of too much product available. The price of grain is just so incredibly low when expressed in terms of how many middle-class wagehours is required to buy a days worth of calories in grain. When push comes to shove, the rise in price of the product can more than match any rise in the price of inputs for a very long way up the cost/supply/demand surface.

Of course, it is a bumpy ride, as input prices rise, some farmers go out of business or try other variations of agriculture, removing grain from market, supply drops, if it drops enough, futures markets react as Kellog and Bread Incorporated can not survive glitches in their supply, price rises, but supply can't react for many months, if it does at all.

$this->bbcode_second_pass_quote('', 'X') vs the US that imposes and oil embargo on the US,


Embargo not needed. No one will be interested in shipping oil to the US in the first place. Dollars? who would want those; already have a couple rolls of toilet paper in the bathroom.

$this->bbcode_second_pass_quote('', 'C')hina may even take opportunity to take Taiwan, which they will need in the future if they want to have a true blue water navy.


Note recent attitudes in Taiwan. I think a good portion of the Taiwanese are starting to see the US for the manipulative idiots we are, and the PRC as the solid businessmen they are. The fervor of the nationalists is not exactly recent memory to most of the voting age population. I'd put good money on a successful reunification vote within a couple decades. Business interests in Hong Kong have not exactly been crippled by their reunification.

$this->bbcode_second_pass_quote('', 'W')hat would the US response be if China backs Iran and Iran rains several hundred missiles down on Ras Tanura oil terminal in Saudi Arabia?

Who knows. My bet would be on an ineffective but showy retaliation by cruise missiles into Iran. I think such an event is extremely unlikely though.
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Re: China's Rise/ World Ramifications

Unread postby rangerone314 » Tue 18 Aug 2009, 14:08:07

$this->bbcode_second_pass_quote('AgentR', '')$this->bbcode_second_pass_quote('', 'W')hat would the US response be if China backs Iran and Iran rains several hundred missiles down on Ras Tanura oil terminal in Saudi Arabia?


Who knows. My bet would be on an ineffective but showy retaliation by cruise missiles into Iran. I think such an event is extremely unlikely though.


The unlikely sometimes happens... Frank Knox, U.S. Secretary of Navy, December 4, 1941 : "No matter what happens, the U.S. Navy is not going to be caught napping"

Japan didn't like oil embargo we had on them, any more than Iran will like the petroleum finished product embargo we will put on them since they need gasoline to drive cars and trucks.

If that doesn't anger them enough, Israel hits them hard after diplomacy and sanctions fail (and they usually do) because they view a nuclear-armed Iran as an existential threat.

The one way they could hurt us the most is probably hitting Ras Tanura. They have enough missiles to turn Ras Tanura into a Sanford & Son junkpile.

Also don't be so quick to dismiss Spratley and Paracel Islands as a mere border dispute. It is more than just oil rights. They are also strategically situated to cufoff oil shipping routes to Japan.
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Re: China's Rise/ World Ramifications

Unread postby AgentR » Tue 18 Aug 2009, 15:21:25

$this->bbcode_second_pass_quote('rangerone314', 'A')lso don't be so quick to dismiss Spratley and Paracel Islands as a mere border dispute. It is more than just oil rights. They are also strategically situated to cufoff oil shipping routes to Japan.


Southern Taiwan is superior, and will be loyal to Beijing long before any thoughts of wanting to cut off Mid East oil supplies to Japan.

But again, I think you are missing the point because you are seeing through the eyes of our past. Our past methods have proven to be failures, they are too expensive and too ineffective. They create losses, not profits. The promote disorder, not unification. The heart of China's play is the stability of the rinminbi. I don't know whether they were prescient or just lucky, but their continuous, strong export surplus coupled with a large scale industrial population has produced a very solid currency, and they have the patience to see it come into its own.

China doesn't want the US or Japan embargoed. China wants the US and Japan to be buying oil contracted in rinminbi; giving them full control of the oil market, when that control will matter most. One might add, a level of control we squandered through our own lusts and gluttony.
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Re: China's Rise/ World Ramifications

Unread postby rangerone314 » Wed 19 Aug 2009, 08:17:31

$this->bbcode_second_pass_quote('AgentR', '')$this->bbcode_second_pass_quote('rangerone314', 'A')lso don't be so quick to dismiss Spratley and Paracel Islands as a mere border dispute. It is more than just oil rights. They are also strategically situated to cufoff oil shipping routes to Japan.


Southern Taiwan is superior, and will be loyal to Beijing long before any thoughts of wanting to cut off Mid East oil supplies to Japan.

But again, I think you are missing the point because you are seeing through the eyes of our past. Our past methods have proven to be failures, they are too expensive and too ineffective. They create losses, not profits. The promote disorder, not unification. The heart of China's play is the stability of the rinminbi. I don't know whether they were prescient or just lucky, but their continuous, strong export surplus coupled with a large scale industrial population has produced a very solid currency, and they have the patience to see it come into its own.

China doesn't want the US or Japan embargoed. China wants the US and Japan to be buying oil contracted in rinminbi; giving them full control of the oil market, when that control will matter most. One might add, a level of control we squandered through our own lusts and gluttony.


So China is militarizing Spratley Islands, and getting naval bases in Burma and Sri Lanka because they DONT want to emulate us or our past methods?

Our methods of control have helped us maintain an empire and maintain a level of control, but you are right about "squandered through our own lusts and gluttony".

I am beginning to think that attacking Iran would be rather foolhardy... an overreach comparable to Athens attacking Syracuse in Sicily... and the Chinese would probably do what Sparta did... send advisors to help.

I would also consider that US vulnerability with regards to Middle East oil is similar to the vulnerability of Athens to losing their silver mine at Laurium in the sense that it would be a game ender.

Don't be surprised to see the SCO evolve into something like NATO or the Warsaw Pact.
Last edited by rangerone314 on Wed 19 Aug 2009, 10:19:21, edited 1 time in total.
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Re: China's Rise/ World Ramifications

Unread postby SeaGypsy » Wed 19 Aug 2009, 10:16:52

China, the Philippines, Malaysia, and Thailand all have untested claims on massive chunks of South China seafloor. As peak oil takes grip these disputed territories will become a very serious focus in the region.
Who knows how this is likely to play out? Not me and I have lived in the region most of my life.
It seems very unlikely that anyone can ultimately stand against China in the S.C.Sea.
The Arabs who would back Malaysia, the USA who would back the Philippines, will all be way too busy to get in a war with China over seafloor. In the short term pragmatism will win; in the longer term???
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Re: China's Rise/ World Ramifications

Unread postby americandream » Wed 19 Aug 2009, 16:03:01

$this->bbcode_second_pass_quote('SeaGypsy', 'C')hina, the Philippines, Malaysia, and Thailand all have untested claims on massive chunks of South China seafloor. As peak oil takes grip these disputed territories will become a very serious focus in the region.
Who knows how this is likely to play out? Not me and I have lived in the region most of my life.
It seems very unlikely that anyone can ultimately stand against China in the S.C.Sea.
The Arabs who would back Malaysia, the USA who would back the Philippines, will all be way too busy to get in a war with China over seafloor. In the short term pragmatism will win; in the longer term???


I think you underestimate the sway the US has over China. This is from first hand experience but much of high corporate China is headed by a white face, invariably American and the Chinese have an over weaning dependence on Western knowhow in the operation of their export oriented business. All it would take would be a rush for the door of Western capital and expertise and China would be quickly living off her capital. Not something she can afford.

Unlike the US and Swiss, she enjoys no safe haven status as well so trade is essential. China will break ranks with Western capital eventually as will the rest of the world disengage from the various ties that exist, but by then we will just about have sufficient fuel to run our lawn mowers.
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Re: China's Rise/ World Ramifications

Unread postby SeaGypsy » Wed 19 Aug 2009, 21:08:25

$this->bbcode_second_pass_quote('americandream', '')$this->bbcode_second_pass_quote('SeaGypsy', 'C')hina, the Philippines, Malaysia, and Thailand all have untested claims on massive chunks of South China seafloor. As peak oil takes grip these disputed territories will become a very serious focus in the region.
Who knows how this is likely to play out? Not me and I have lived in the region most of my life.
It seems very unlikely that anyone can ultimately stand against China in the S.C.Sea.
The Arabs who would back Malaysia, the USA who would back the Philippines, will all be way too busy to get in a war with China over seafloor. In the short term pragmatism will win; in the longer term???


I think you underestimate the sway the US has over China. This is from first hand experience but much of high corporate China is headed by a white face, invariably American and the Chinese have an over weaning dependence on Western knowhow in the operation of their export oriented business. All it would take would be a rush for the door of Western capital and expertise and China would be quickly living off her capital. Not something she can afford.

Unlike the US and Swiss, she enjoys no safe haven status as well so trade is essential. China will break ranks with Western capital eventually as will the rest of the world disengage from the various ties that exist, but by then we will just about have sufficient fuel to run our lawn mowers.


You are correct about the 'whiteface' in executive leadership in exporting business in China, this applies more broadly in S.E Asia generally also.

However under the current Chinese corporate structure, China misses out on a massive amount of potential foreign direct business investment. Much of China's business growth is based on internal funding hiring 'whiteface' consultants to run the show. Not many western owned businesses are prepared to invest in building where the Government takes 50% of board positions automaticly. This situation gives a competitive advantage to countries like Singapore; where corporate structuring is much more similar to western norms.

On the lawnmower issue, most asian families are still running a lawnmower sized engine in their only transport, a small motorbike. The energy we put into mowing our lawns (utterly un-productive) is equivalent to that used for an entire families transport needs in much of asia. Only the richest of the rich have lawns at all in asia.
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Re: China's Rise/ World Ramifications

Unread postby americandream » Wed 19 Aug 2009, 22:45:31

$this->bbcode_second_pass_quote('SeaGypsy', '')$this->bbcode_second_pass_quote('americandream', '')$this->bbcode_second_pass_quote('SeaGypsy', 'C')hina, the Philippines, Malaysia, and Thailand all have untested claims on massive chunks of South China seafloor. As peak oil takes grip these disputed territories will become a very serious focus in the region.
Who knows how this is likely to play out? Not me and I have lived in the region most of my life.
It seems very unlikely that anyone can ultimately stand against China in the S.C.Sea.
The Arabs who would back Malaysia, the USA who would back the Philippines, will all be way too busy to get in a war with China over seafloor. In the short term pragmatism will win; in the longer term???


I think you underestimate the sway the US has over China. This is from first hand experience but much of high corporate China is headed by a white face, invariably American and the Chinese have an over weaning dependence on Western knowhow in the operation of their export oriented business. All it would take would be a rush for the door of Western capital and expertise and China would be quickly living off her capital. Not something she can afford.

Unlike the US and Swiss, she enjoys no safe haven status as well so trade is essential. China will break ranks with Western capital eventually as will the rest of the world disengage from the various ties that exist, but by then we will just about have sufficient fuel to run our lawn mowers.


You are correct about the 'whiteface' in executive leadership in exporting business in China, this applies more broadly in S.E Asia generally also.

However under the current Chinese corporate structure, China misses out on a massive amount of potential foreign direct business investment. Much of China's business growth is based on internal funding hiring 'whiteface' consultants to run the show. Not many western owned businesses are prepared to invest in building where the Government takes 50% of board positions automaticly. This situation gives a competitive advantage to countries like Singapore; where corporate structuring is much more similar to western norms.

On the lawnmower issue, most asian families are still running a lawnmower sized engine in their only transport, a small motorbike. The energy we put into mowing our lawns (utterly un-productive) is equivalent to that used for an entire families transport needs in much of asia. Only the richest of the rich have lawns at all in asia.


Joint ventures are the largest source of foreign investtment and when I last looked, were running white hot. In fact theres a queue of these awaiting approval and all but a few are driven by western money.
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Re: China's Rise/ World Ramifications

Unread postby SeaGypsy » Thu 20 Aug 2009, 11:45:20

OK then let's call it like it is:

China: $2.50 day

Philippines: $5.00 day

Singapore $5.00 hour

Australia $20.00 hour

The rest of SE Asiia fits in the preceeding end of this table.

If you need a shite load of workers with moderate skill levels/ China.

If you need a goodly number with moderate skills and English/ Philippines.

If you need a moderate number of workers with Chinese and English skills/ Singapore.

If you need a small number of extremely well supplied workers/ Australia.

The less you pay per worker the more corrupt the regime, the more intermittent the power supply etc etc...

When China catches up in terms of English, fiscal and prudential responsibility, reliability of service/ commodity inputs; the rest will be struggling to compete.

Sad fact.
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