Issue at hand is they have restricted immigration before, only to reopen the floodgates again. Several cycles of this actually. What is happening is an actual erosion of the Singaporean way of life, our culture.
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The Dragon Has a Soft Underbelly: How China's Military has many Weaknesses
- Thread starter capamerica
- Start date
Issue at hand is they have restricted immigration before, only to reopen the floodgates again. Several cycles of this actually. What is happening is an actual erosion of the Singaporean way of life, our culture.
that's true for any country today.
if u know how to defeat X, of course, defeating them would be a piece of a cake. that's a tautological argument.
If they can't defeat, thrash,crush, demolish a smaller country of CECAs.
Then you know they are really, really, really lousy at warfare.
Massage parlours for their women and pig rearing for their men is their best prospects.
The longest retreat in Yankee military history was due to Tiongs
Tells you that Yankees can never fight and defeat countries bigger than them in population.
Which is exactly why Middle Eastern countries and peoples are rather stupid not to see this and increase their populations rapidly.
I mean Egypt, Iran, Turkey with 80-90 million people only are considered 'big/populous' countries there.
PLA controlled by own Masters, easy to defeat weak China Military due to poor internal controls
https://www.theatlantic.com/international/archive/2017/04/xi-jinping-china-trump-ccp-pla/522057/
Xi Jinping May Be Less Powerful Than He Seems
As Donald Trump sizes up the Chinese president, he may be surprised by what he finds.
https://www.theatlantic.com/international/archive/2017/04/xi-jinping-china-trump-ccp-pla/522057/
Xi Jinping May Be Less Powerful Than He Seems
As Donald Trump sizes up the Chinese president, he may be surprised by what he finds.
The moment this prick is gone there will be jubilation, dancing on the streets
China boasts world’s largest navy: US DoD report
2 September 2020 (Last Updated September 2nd, 2020 11:10)
The US Department of Defense (DoD) has released its ‘2020 China Military Power Report’ showing that the People’s Republic of China (PRC) has the largest navy in the world, surpassing the US Navy.
People’s Liberation Army (Navy) ships Yueyang (FF 575) (left) and Haikou (DD 171) (right) participates in a replenishment-at-sea (RAS) approach exercise during Rim of the Pacific (RIMPAC) Exercise 2014. Image: US Navy.
In the report submitted to Congress annually, the Pentagon said: “The PRC has the largest navy in the world, with an overall battle force of approximately 350 ships and submarines including over 130 major surface combatants.
“In comparison, the US Navy’s battle force is approximately 293 ships as of early 2020.”
Speaking at a press conference, Deputy Assistant Secretary of Defense for China Chad Sbragia said that China was on course to expand its fleet to 360 vessels by the end of 2020.
The majority of the People’s Liberation Army Navy (PLAN) fleet is made up of ‘modern multi-role platforms’ that host anti-ship, anti-air and anti-submarine weapons and sensors, the report says.
As part of the PLAN’s modernisation efforts, it has embarked on a shipbuilding programme that includes submarines, surface combatants, amphibious warfare ships, aircraft carriers, and auxiliary ships as well as indigenous weapons, sensors and command and control systems.
China’s fleet breakdown
Last year the PLAN commissioned its first domestically-built aircraft carrier; this ship is expected to enter service in 2023. China also last year launched its first Yushen class amphibious assault ship, the country’s first large-deck amphibious ship.
China’s latest-generation aircraft carriers feature a catapult launching system and offer greater endurance than the countries’ earlier carriers. These, along with other
improvements, increase the potential strike power of a potential carrier group deployed outside ‘China’s immediate periphery.’
The report reads: “China continues to learn lessons from operating its first aircraft carrier, Liaoning. Its first domestically built aircraft carrier, Shandong, was launched in 2017 and commissioned in December 2019—the beginning of what the PLA states will be a multi-carrier force.
“China’s next generation of carriers, including one that began construction in 2018, will have greater endurance and a catapult launch system capable of launching various types of special mission fixed-wing aircraft for missions such as early warning, EW [electronic warfare], and ASW [anti-submarine warfare].”
The DoD report explains that the modernisation push aligns with China’s growing interest in the maritime domain and demands for the PLAN to operate further from mainland China.
Sbragia said: “This report in particular, which we’re here to talk about, doesn’t take a position on future force structure of the United States Navy. It states as a fact the size of each country’s battle force.
“There is certainly more to naval power than ship counts, total counts of the Chinese vessels, there’s tonnage, but I would also draw your attention to weapons systems and it’s important to highlight the Chinese shipbuilding advantages in terms of its size of fleet, is both in context of the broader modernization ambitions, virtual class military.”
The report says that China is increasingly looking to expand its naval operations ‘beyond China’s immediate region’, a move the US says facilitates the countries ‘non-war military activities and further legitimise the PRC’s [People’s Republic of China’s] growing global military posture’.
The DoD report adds: “The PLAN’s ability to perform missions beyond the First Island Chain is modest but growing as it gains more experience operating in distant waters and acquires larger and more advanced platforms.
“China’s experience in extended range operations primarily comes from extended task group deployments and its ongoing counterpiracy mission in the Gulf of Aden.”
China’s naval power is split between three theatres, the Northern, Eastern and Southern, each with its own headquarters in Qingdao, Ningbo, and Zhanjiang respectively.
2 September 2020 (Last Updated September 2nd, 2020 11:10)
The US Department of Defense (DoD) has released its ‘2020 China Military Power Report’ showing that the People’s Republic of China (PRC) has the largest navy in the world, surpassing the US Navy.
In the report submitted to Congress annually, the Pentagon said: “The PRC has the largest navy in the world, with an overall battle force of approximately 350 ships and submarines including over 130 major surface combatants.
“In comparison, the US Navy’s battle force is approximately 293 ships as of early 2020.”
Speaking at a press conference, Deputy Assistant Secretary of Defense for China Chad Sbragia said that China was on course to expand its fleet to 360 vessels by the end of 2020.
The majority of the People’s Liberation Army Navy (PLAN) fleet is made up of ‘modern multi-role platforms’ that host anti-ship, anti-air and anti-submarine weapons and sensors, the report says.
As part of the PLAN’s modernisation efforts, it has embarked on a shipbuilding programme that includes submarines, surface combatants, amphibious warfare ships, aircraft carriers, and auxiliary ships as well as indigenous weapons, sensors and command and control systems.
China’s fleet breakdown
- Aircraft carriers – 2
- Cruisers – 1
- Destroyers – 32
- Frigates – 49
- Corvettes – 37
- Amphibious transport dock – 37
- Medium landing ships – 21
- Diesel attack submarines – 46
- Nuclear attack submarines – 6
- Ballistic missile submarines – 4
- Coastal patrol (missile) – 86
Last year the PLAN commissioned its first domestically-built aircraft carrier; this ship is expected to enter service in 2023. China also last year launched its first Yushen class amphibious assault ship, the country’s first large-deck amphibious ship.
China’s latest-generation aircraft carriers feature a catapult launching system and offer greater endurance than the countries’ earlier carriers. These, along with other
improvements, increase the potential strike power of a potential carrier group deployed outside ‘China’s immediate periphery.’
The report reads: “China continues to learn lessons from operating its first aircraft carrier, Liaoning. Its first domestically built aircraft carrier, Shandong, was launched in 2017 and commissioned in December 2019—the beginning of what the PLA states will be a multi-carrier force.
“China’s next generation of carriers, including one that began construction in 2018, will have greater endurance and a catapult launch system capable of launching various types of special mission fixed-wing aircraft for missions such as early warning, EW [electronic warfare], and ASW [anti-submarine warfare].”
The DoD report explains that the modernisation push aligns with China’s growing interest in the maritime domain and demands for the PLAN to operate further from mainland China.
Sbragia said: “This report in particular, which we’re here to talk about, doesn’t take a position on future force structure of the United States Navy. It states as a fact the size of each country’s battle force.
“There is certainly more to naval power than ship counts, total counts of the Chinese vessels, there’s tonnage, but I would also draw your attention to weapons systems and it’s important to highlight the Chinese shipbuilding advantages in terms of its size of fleet, is both in context of the broader modernization ambitions, virtual class military.”
The report says that China is increasingly looking to expand its naval operations ‘beyond China’s immediate region’, a move the US says facilitates the countries ‘non-war military activities and further legitimise the PRC’s [People’s Republic of China’s] growing global military posture’.
The DoD report adds: “The PLAN’s ability to perform missions beyond the First Island Chain is modest but growing as it gains more experience operating in distant waters and acquires larger and more advanced platforms.
“China’s experience in extended range operations primarily comes from extended task group deployments and its ongoing counterpiracy mission in the Gulf of Aden.”
China’s naval power is split between three theatres, the Northern, Eastern and Southern, each with its own headquarters in Qingdao, Ningbo, and Zhanjiang respectively.
all untested shit. Bully small fry they are good. A real war they have lost every past one
we all know who has the most powerful military. add the allies and the chinks are nothing but shit
Ah tiong land will steal the technology n make it better
DARPA/US Air Force hypersonic air-breathing weapon ready for free flight
Artist's concept of the HAWC vehicle
DARPA
View 1 Images
Two variants of the Hypersonic Air-breathing Weapon Concept (HAWC) being developed for DARPA and the US Air Force have completed their final captive carry flight tests and are now cleared for their first free-flight tests within the next year.
In a scramble not seen in the military aerospace field since the sound barrier was broken in 1947, the race to develop hypersonic weapons by the major powers has the potential to revolutionize warfare in the 21st century. Being able to fly at over five times the speed of sound, hypersonic missiles and aircraft would literally be able to outrun conventional weapons. They would also allow only a very small window of time for targeting systems to lock onto them and would have so much momentum that some wouldn't even need explosives to destroy their targets.
More Stories
However, to achieve this and make hypersonic weapons practical, a number of technologies need to be brought to maturity. Specifically, such missiles need next-generation flight controls and avionics, cooling systems to battle the high temperatures that hypersonic flight generates, and propulsions systems that can operate at hypersonic speeds.
The lattermost is particularly important because most hypersonic vehicles being tested today are boost-glide weapons, which are dropped from an aircraft, boosted to hypersonic speed at a high altitude by a rocket, then glide down to their target. This means that the missile has to be launched at a very long distance and requires the target to be in a more or less predictable place when the missile arrives.
The HAWC project's goal is to essentially build a hypersonic cruise missile that breathes air to feed its engine. This would allow the weapon to be launched at a low altitude and closer to the target, and would produce a more maneuverable missile that would be harder to detect.
To achieve this, contractors Lockheed Martin and Raytheon Technologies are each working on advanced air vehicle configurations that will have a hydrocarbon scramjet-powered propulsion and thermal management system for sustained hypersonic flight during the first free-flight tests.
"Completing the captive carry series of tests demonstrates both HAWC designs are ready for free flight," says Andrew “Tippy” Knoedler, HAWC program manager in DARPA’s Tactical Technology Office. "These tests provide us a large measure of confidence – already well-informed by years of simulation and wind tunnel work – that gives us faith the unique design path we embarked on will provide unmatched capability to US forces."
Source: DARPA
DARPA/US Air Force hypersonic air-breathing weapon ready for free flight
Artist's concept of the HAWC vehicle
DARPA
View 1 Images
Two variants of the Hypersonic Air-breathing Weapon Concept (HAWC) being developed for DARPA and the US Air Force have completed their final captive carry flight tests and are now cleared for their first free-flight tests within the next year.
In a scramble not seen in the military aerospace field since the sound barrier was broken in 1947, the race to develop hypersonic weapons by the major powers has the potential to revolutionize warfare in the 21st century. Being able to fly at over five times the speed of sound, hypersonic missiles and aircraft would literally be able to outrun conventional weapons. They would also allow only a very small window of time for targeting systems to lock onto them and would have so much momentum that some wouldn't even need explosives to destroy their targets.
More Stories
However, to achieve this and make hypersonic weapons practical, a number of technologies need to be brought to maturity. Specifically, such missiles need next-generation flight controls and avionics, cooling systems to battle the high temperatures that hypersonic flight generates, and propulsions systems that can operate at hypersonic speeds.
The lattermost is particularly important because most hypersonic vehicles being tested today are boost-glide weapons, which are dropped from an aircraft, boosted to hypersonic speed at a high altitude by a rocket, then glide down to their target. This means that the missile has to be launched at a very long distance and requires the target to be in a more or less predictable place when the missile arrives.
The HAWC project's goal is to essentially build a hypersonic cruise missile that breathes air to feed its engine. This would allow the weapon to be launched at a low altitude and closer to the target, and would produce a more maneuverable missile that would be harder to detect.
To achieve this, contractors Lockheed Martin and Raytheon Technologies are each working on advanced air vehicle configurations that will have a hydrocarbon scramjet-powered propulsion and thermal management system for sustained hypersonic flight during the first free-flight tests.
"Completing the captive carry series of tests demonstrates both HAWC designs are ready for free flight," says Andrew “Tippy” Knoedler, HAWC program manager in DARPA’s Tactical Technology Office. "These tests provide us a large measure of confidence – already well-informed by years of simulation and wind tunnel work – that gives us faith the unique design path we embarked on will provide unmatched capability to US forces."
Source: DARPA
China's leaders are strong and emboldened. It's wrong to see them as weak and insecure
Mark Schiefelbein/AP.Saul Eslake, University of Tasmania
September 9, 2020 3.21pm AESTUpdated September 9, 2020 6.07pm AEST
There’s an emerging view that China’s belligerent approach and “torching” of diplomatic relationships with the wider world is a sign of “insecurity and weakness”; that its economic growth is “unsustainable”; and that “everyone in the top ranks of the Chinese Communist Party” knows the day is coming when “China’s entire economic structure and strategic position crumbles”.
These views are drawn from an essay by Peter Zeihan entitled A Failure of Leadership: The Beginning of the End of China.
He describes himself as a geopolitical strategist whose work history includes a stint working for the US State Department in Australia.
He is hardly the first person to say these sorts of things, and I suspect he won’t be the first to be wrong about them, at least for quite a while.
That’s not to say he doesn’t draw on facts. China has been extraordinarily profligate in its use of capital, and has become progressively more so over the last two decades.
Paul Krugman (1994) famously made the same point about the then rapidly-growing smaller East Asian economies a few years before the Asian financial crisis in The Myth of Asia’s Miracle.
China is certainly laden with debt
Nor is there any denying that China has an enormous amount of debt relative to the size of its economy, especially for what is still in many ways a “developing” economy.
Debt as a percentage of GDP
December 2019. Bank for International Settlements, Credit to the non-financial sector
But, and this is an important “but”, most of that debt is owed by state-owned enterprises to state-owned banks – which can be thought of as two entries on opposing sides of the same balance sheet, that of the People’s Republic of China.
If a lot of that were to turn “bad”, which is by no means impossible, then the ensuing “crisis” could be solved by writing it off, and then re-capitalising the state-owned banks by drawing down on the foreign exchange reserves of the People’s Bank of China.
China has actually done this twice before, in the late 1990s as part of the state-owned enterprise reforms pushed through by then-Premier Zhu Rongji, and again between 2003 and 2005, when the big four state-owned banks were “cleaned up” ahead of their very partial privatisation and listing on the Hong Kong Stock Exchange.
The “bad assets” were transferred into an entity called Central Huijin which subsequently became the nucleus of China’s sovereign wealth fund, the China Investment Corporation.
An unknown question is whether the People’s Bank of China’s foreign exchange reserves would be sufficient for what would now be a much larger task.
It lost one quarter of its reserves (almost US$1 trillion) defending its currency between June 2014 and December 2016, after which it imposed very strict controls on capital outflows, which have remained in force ever since and are easier to maintain in an authoritarian regime that knows how to deploy modern technology for surveillance purposes than in other countries that have resorted to capital controls such as Argentina.
But it is aware of the risks…
Since that time, the ubiquitous “Chinese authorities”, as they are usually referred to by Western economists, have been acutely aware of the risks to financial stability posed by the growth of so-called shadow banks and the way Chinese banks have become more dependent on wholesale funding and less on deposits; as US and European banks did, to a much greater extent, in the years leading up to the global financial crisis.
That’s in part why China’s economic growth rate has been steadily slowing over the the past decade, from an average of 11.3% in the five years to 2009, to 8.5% in the five years to 2014, and to 6.6% in the five years to 2019.
Another important reason has been that China’s working-age population peaked in 2014 and has since shrunk by almost 1.5%.
It also helps explain why the People’s Bank of China hasn’t done nearly as much monetary stimulus as it did during and after the financial crisis or in 2015-16.
There hasn’t been a significant acceleration in credit growth in recent months nor has there been a surge in property development or prices, as there would have been if the People’s Bank of China had unleashed another wave of credit.
Average annual growth in China’s real GDP over five-year intervals
Source: China National Bureau of Statistics
China’s authorities are doing more fiscal stimulus than they did 12 years ago, although it is in different forms to the construction-intensive programs it implemented then.
The potentially most worrying development – albeit not from the perspective of the next year or so – is the one depicted in this chart, which shows a marked divergence between the level of foreign exchange reserves and the rate of growth in domestic credit.
China’s domestic credit and foreign exchange reserves
Credit converted from yuan to US$ at month-average exchange rates. People’s Bank of China; Jonathan Anderson (2020); author’s calculations.
For a fixed exchange rate system to be sustainable, the two ordinarily need to maintain a fairly close and stable relationship – which they do under a “currency board” like the one Hong Kong has had since 1984 (or that the Baltic states had before joining the euro, and which Bulgaria still has) where the monetary authority is explicitly precluded from issuing currency unless it is backed by foreign exchange reserves (or, in Hong Kong’s case, reserves plus the Land Fund).
China’s foreign exchange rate is of course no longer completely fixed, but rather is “carefully managed” around a peg to a trade-weighted index (as the Australian dollar used to be between 1976 and 1983).
But the People’s Bank of China’s capacity to maintain that peg is dependent on the credibility of its implicit promise to buy or sell its currency in whatever quantity is required to keep the exchange rate close to the peg.
…and good at limiting capital flight
Obviously China can sell its currency in whatever quantities it likes, since it are the ultimate source of its currency, and so can always prevent it from appreciating more than it wants (as can any country which is prepared to accept the potentially inflationary consequences of a sudden large increase in its domestic money supply).
But China doesn’t own or operate a US dollar factory, so it can only stave off a big depreciation for as long as it has sufficient foreign exchange reserves to satisfy everyone who wants to convert its currency into foreign dollars.
And that’s why the capital controls are so important at the moment: because they limit the demand for foreign currencies enough to ensure that the level of foreign exchange reserves is more than adequate, and widely regarded as such.
If something were to happen that resulted in a tsunami of capital outflows, and the Chinese authorities didn’t have any other ways of stopping it (such as confiscating the assets of or imprisoning or executing people who tried to get their money out of the country, something which I am sure they might not baulk at) there would be a “currency crisis”; the Chinese renminbi fall a lot, and the weakness in the domestic financial system (resulting from the accumulation of so much bad debt) would be fully exposed.
But you have to ask, how likely is that in the foreseeable future?
I can’t see any reason to answer that question with anything other than “not very”.
It’s worth remembering in this context that the lesson which the Chinese Communist Party drew from the collapse of the Soviet empire is that brutal authoritarian regimes can only survive, once they have clearly failed to deliver on the promise of delivering ongoing improvements in people’s well-being, for as long as they are willing to kill their own people in sufficient numbers to quieten resistance, or for as long as there is someone else who is willing and able to do it for them.
China is authoritarian…
The Communist regimes of Eastern Europe, most of which had been demonstrably willing to shoot their own people (or allow the Soviets in to do it for them) at various times in the 1950s, 1960s and early 1980s, collapsed when they lost the will to shoot their own people, and the Soviets under Gorbachev lost the will to do it for them.
And the Soviet Union itself collapsed in 1991 when neither Gorbachev, nor the cabal of drunken fools who briefly tried to overthrow him in August of that year, were willing to shoot their own people.
It is worth noting in passing that Vladimir Putin has repeatedly demonstrated that he has no such scruples about killing his own people – whether they be ordinary Russians in high-rise apartments around Moscow, middle-class Muscovites attending the theatre, school children and their parents in Beslan, troublesome journalists, former KGB agents living in the UK, lawyers for aggrieved hedge fund managers, or prominent opposition figures.
By contrast with their contemporaries in Eastern Europe and the Soviet Union, Deng Xiaoping and Li Peng demonstrated that they were perfectly relaxed about the idea of shooting, or running over with tanks, large numbers of their own people in order to ensure that they remained in power – and even more competent than Josef Stalin in air-brushing those events out of the collective memory of the people who remained alive.
And I suspect nothing has changed, at least in that regard, since then.
Indeed Xi Jinping has repeatedly shown that he’s prepared to do whatever is required to entrench the Chinese Communist Party as the source of all power in China, to sideline potential rivals and to remain in office for as long as he is capable of drawing breath (not least because he is smart enough to know that he has made a lot of enemies, and that they would take their revenge on him and his family and supporters as soon as he was out of power – as Putin did to Boris Yeltsin’s wealthy supporters).
Far from feeling “weak and insecure”, I think China feels strong and emboldened – not only by its apparent success in stopping the spread of the virus (admittedly after a number of initial serious missteps) but also by the manifest incompetence of the US administration in dealing with COVID-19, and its almost complete abdication of its traditional global leadership role (something that, to be fair, didn’t start under Trump).
That’s why Xi has explicitly discarded Deng Xiaoping’s dictum that China should “hide your capacities and bide your time” – much as, Woodrow Wilson and, more forcefully, Roosevelt and his successors all the way to George W Bush – were prepared to discard George Washington’s advice, in his 1796 farewell address (which was actually written by Alexander Hamilton) to “avoid foreign entanglements”.
Xi (and, as far as one can tell, most of the Chinese population) think that “now” is China’s “time”. That’s what he means by phrases like “the great rejuvenation of the Chinese nation” and the “Chinese dream”.
And of course China’s economy, notwithstanding its burden of debt, is much stronger than the Soviet Union’s ever was.
Size of Soviet Union and China economies in relation to the United States
Comparison with USSR and based on estimates of GDP in 1990 US dollars at purchasing power parities; comparison with China based on official estimates of GDP in 2019 US dollars at purchasing power parities. Sources: Conference Board Total Economy Database; author’s calculations
The closest the Soviet economy ever got to matching the United States’ was between 1974 and 1976 when it reached 44% of US gross domestic product. By the time Gorbachev took office in 1985 it was down to 38%, and in 1991, when the Soviet Union collapsed, its GDP was less than a third of the United States.
By contrast, measured in the same way, China’s economy surpassed the US economy in 2017, and this year is likely to be at least 10% bigger than the US (when compared using actual buying power – “purchasing power parity” – rather than the official exchange rate which shows the Chinese economy only about two-thirds of the US economy which is still a lot closer than the Soviet Union got).
…and its least-dependent in decades
It’s perhaps also worth noting that China isn’t really all that dependent on exports any more – in 2019 exports accounted for only 18.4% of China’s economy, down from a peak of 36% in 2006 and less than at any time since 1991.
Big economies, like China’s now is, tend to be relatively “closed”, which is why exports only represent 12% of the US GDP and 18.5% of Japan’s compared to 24% of Australia’s.
So, to summarise, I can’t agree with the proposition that China’s growth model is unsustainable and its leadership weak and insecure.
Of course, in the long run (when, as the economist John Maynard Keynes famously said, we’re all dead), it might turn out to be right. China’s government and its growth model might collapse.
But I’m not going to lie awake at night wondering whether it’s happened.
September 9, 2020 3.21pm AESTUpdated September 9, 2020 6.07pm AEST
There’s an emerging view that China’s belligerent approach and “torching” of diplomatic relationships with the wider world is a sign of “insecurity and weakness”; that its economic growth is “unsustainable”; and that “everyone in the top ranks of the Chinese Communist Party” knows the day is coming when “China’s entire economic structure and strategic position crumbles”.
These views are drawn from an essay by Peter Zeihan entitled A Failure of Leadership: The Beginning of the End of China.
He describes himself as a geopolitical strategist whose work history includes a stint working for the US State Department in Australia.
He is hardly the first person to say these sorts of things, and I suspect he won’t be the first to be wrong about them, at least for quite a while.
That’s not to say he doesn’t draw on facts. China has been extraordinarily profligate in its use of capital, and has become progressively more so over the last two decades.
Paul Krugman (1994) famously made the same point about the then rapidly-growing smaller East Asian economies a few years before the Asian financial crisis in The Myth of Asia’s Miracle.
China is certainly laden with debt
Nor is there any denying that China has an enormous amount of debt relative to the size of its economy, especially for what is still in many ways a “developing” economy.
Debt as a percentage of GDP
December 2019. Bank for International Settlements, Credit to the non-financial sector
But, and this is an important “but”, most of that debt is owed by state-owned enterprises to state-owned banks – which can be thought of as two entries on opposing sides of the same balance sheet, that of the People’s Republic of China.
If a lot of that were to turn “bad”, which is by no means impossible, then the ensuing “crisis” could be solved by writing it off, and then re-capitalising the state-owned banks by drawing down on the foreign exchange reserves of the People’s Bank of China.
China has actually done this twice before, in the late 1990s as part of the state-owned enterprise reforms pushed through by then-Premier Zhu Rongji, and again between 2003 and 2005, when the big four state-owned banks were “cleaned up” ahead of their very partial privatisation and listing on the Hong Kong Stock Exchange.
The “bad assets” were transferred into an entity called Central Huijin which subsequently became the nucleus of China’s sovereign wealth fund, the China Investment Corporation.
An unknown question is whether the People’s Bank of China’s foreign exchange reserves would be sufficient for what would now be a much larger task.
It lost one quarter of its reserves (almost US$1 trillion) defending its currency between June 2014 and December 2016, after which it imposed very strict controls on capital outflows, which have remained in force ever since and are easier to maintain in an authoritarian regime that knows how to deploy modern technology for surveillance purposes than in other countries that have resorted to capital controls such as Argentina.
But it is aware of the risks…
Since that time, the ubiquitous “Chinese authorities”, as they are usually referred to by Western economists, have been acutely aware of the risks to financial stability posed by the growth of so-called shadow banks and the way Chinese banks have become more dependent on wholesale funding and less on deposits; as US and European banks did, to a much greater extent, in the years leading up to the global financial crisis.
That’s in part why China’s economic growth rate has been steadily slowing over the the past decade, from an average of 11.3% in the five years to 2009, to 8.5% in the five years to 2014, and to 6.6% in the five years to 2019.
Another important reason has been that China’s working-age population peaked in 2014 and has since shrunk by almost 1.5%.
It also helps explain why the People’s Bank of China hasn’t done nearly as much monetary stimulus as it did during and after the financial crisis or in 2015-16.
There hasn’t been a significant acceleration in credit growth in recent months nor has there been a surge in property development or prices, as there would have been if the People’s Bank of China had unleashed another wave of credit.
Average annual growth in China’s real GDP over five-year intervals
Source: China National Bureau of Statistics
China’s authorities are doing more fiscal stimulus than they did 12 years ago, although it is in different forms to the construction-intensive programs it implemented then.
The potentially most worrying development – albeit not from the perspective of the next year or so – is the one depicted in this chart, which shows a marked divergence between the level of foreign exchange reserves and the rate of growth in domestic credit.
China’s domestic credit and foreign exchange reserves
Credit converted from yuan to US$ at month-average exchange rates. People’s Bank of China; Jonathan Anderson (2020); author’s calculations.
For a fixed exchange rate system to be sustainable, the two ordinarily need to maintain a fairly close and stable relationship – which they do under a “currency board” like the one Hong Kong has had since 1984 (or that the Baltic states had before joining the euro, and which Bulgaria still has) where the monetary authority is explicitly precluded from issuing currency unless it is backed by foreign exchange reserves (or, in Hong Kong’s case, reserves plus the Land Fund).
China’s foreign exchange rate is of course no longer completely fixed, but rather is “carefully managed” around a peg to a trade-weighted index (as the Australian dollar used to be between 1976 and 1983).
But the People’s Bank of China’s capacity to maintain that peg is dependent on the credibility of its implicit promise to buy or sell its currency in whatever quantity is required to keep the exchange rate close to the peg.
…and good at limiting capital flight
Obviously China can sell its currency in whatever quantities it likes, since it are the ultimate source of its currency, and so can always prevent it from appreciating more than it wants (as can any country which is prepared to accept the potentially inflationary consequences of a sudden large increase in its domestic money supply).
But China doesn’t own or operate a US dollar factory, so it can only stave off a big depreciation for as long as it has sufficient foreign exchange reserves to satisfy everyone who wants to convert its currency into foreign dollars.
And that’s why the capital controls are so important at the moment: because they limit the demand for foreign currencies enough to ensure that the level of foreign exchange reserves is more than adequate, and widely regarded as such.
If something were to happen that resulted in a tsunami of capital outflows, and the Chinese authorities didn’t have any other ways of stopping it (such as confiscating the assets of or imprisoning or executing people who tried to get their money out of the country, something which I am sure they might not baulk at) there would be a “currency crisis”; the Chinese renminbi fall a lot, and the weakness in the domestic financial system (resulting from the accumulation of so much bad debt) would be fully exposed.
But you have to ask, how likely is that in the foreseeable future?
I can’t see any reason to answer that question with anything other than “not very”.
It’s worth remembering in this context that the lesson which the Chinese Communist Party drew from the collapse of the Soviet empire is that brutal authoritarian regimes can only survive, once they have clearly failed to deliver on the promise of delivering ongoing improvements in people’s well-being, for as long as they are willing to kill their own people in sufficient numbers to quieten resistance, or for as long as there is someone else who is willing and able to do it for them.
China is authoritarian…
The Communist regimes of Eastern Europe, most of which had been demonstrably willing to shoot their own people (or allow the Soviets in to do it for them) at various times in the 1950s, 1960s and early 1980s, collapsed when they lost the will to shoot their own people, and the Soviets under Gorbachev lost the will to do it for them.
And the Soviet Union itself collapsed in 1991 when neither Gorbachev, nor the cabal of drunken fools who briefly tried to overthrow him in August of that year, were willing to shoot their own people.
It is worth noting in passing that Vladimir Putin has repeatedly demonstrated that he has no such scruples about killing his own people – whether they be ordinary Russians in high-rise apartments around Moscow, middle-class Muscovites attending the theatre, school children and their parents in Beslan, troublesome journalists, former KGB agents living in the UK, lawyers for aggrieved hedge fund managers, or prominent opposition figures.
By contrast with their contemporaries in Eastern Europe and the Soviet Union, Deng Xiaoping and Li Peng demonstrated that they were perfectly relaxed about the idea of shooting, or running over with tanks, large numbers of their own people in order to ensure that they remained in power – and even more competent than Josef Stalin in air-brushing those events out of the collective memory of the people who remained alive.
And I suspect nothing has changed, at least in that regard, since then.
Indeed Xi Jinping has repeatedly shown that he’s prepared to do whatever is required to entrench the Chinese Communist Party as the source of all power in China, to sideline potential rivals and to remain in office for as long as he is capable of drawing breath (not least because he is smart enough to know that he has made a lot of enemies, and that they would take their revenge on him and his family and supporters as soon as he was out of power – as Putin did to Boris Yeltsin’s wealthy supporters).
Far from feeling “weak and insecure”, I think China feels strong and emboldened – not only by its apparent success in stopping the spread of the virus (admittedly after a number of initial serious missteps) but also by the manifest incompetence of the US administration in dealing with COVID-19, and its almost complete abdication of its traditional global leadership role (something that, to be fair, didn’t start under Trump).
That’s why Xi has explicitly discarded Deng Xiaoping’s dictum that China should “hide your capacities and bide your time” – much as, Woodrow Wilson and, more forcefully, Roosevelt and his successors all the way to George W Bush – were prepared to discard George Washington’s advice, in his 1796 farewell address (which was actually written by Alexander Hamilton) to “avoid foreign entanglements”.
Xi (and, as far as one can tell, most of the Chinese population) think that “now” is China’s “time”. That’s what he means by phrases like “the great rejuvenation of the Chinese nation” and the “Chinese dream”.
And of course China’s economy, notwithstanding its burden of debt, is much stronger than the Soviet Union’s ever was.
Size of Soviet Union and China economies in relation to the United States
Comparison with USSR and based on estimates of GDP in 1990 US dollars at purchasing power parities; comparison with China based on official estimates of GDP in 2019 US dollars at purchasing power parities. Sources: Conference Board Total Economy Database; author’s calculations
The closest the Soviet economy ever got to matching the United States’ was between 1974 and 1976 when it reached 44% of US gross domestic product. By the time Gorbachev took office in 1985 it was down to 38%, and in 1991, when the Soviet Union collapsed, its GDP was less than a third of the United States.
By contrast, measured in the same way, China’s economy surpassed the US economy in 2017, and this year is likely to be at least 10% bigger than the US (when compared using actual buying power – “purchasing power parity” – rather than the official exchange rate which shows the Chinese economy only about two-thirds of the US economy which is still a lot closer than the Soviet Union got).
…and its least-dependent in decades
It’s perhaps also worth noting that China isn’t really all that dependent on exports any more – in 2019 exports accounted for only 18.4% of China’s economy, down from a peak of 36% in 2006 and less than at any time since 1991.
Big economies, like China’s now is, tend to be relatively “closed”, which is why exports only represent 12% of the US GDP and 18.5% of Japan’s compared to 24% of Australia’s.
So, to summarise, I can’t agree with the proposition that China’s growth model is unsustainable and its leadership weak and insecure.
Of course, in the long run (when, as the economist John Maynard Keynes famously said, we’re all dead), it might turn out to be right. China’s government and its growth model might collapse.
But I’m not going to lie awake at night wondering whether it’s happened.
China's trade dispute with Australia has not extended to iron ore ... yet
By business reporter Andrew Robertson
Posted 4 hours ago, updated26 minutes ago
The deepening chill with China(Andrew Robertson)
Australia's relationship with its biggest trading partner, China, has deteriorated rapidly this year.
Key points:
Huge tariffs on Australian barley, bans on some Australian beef, restrictions on coal and an investigation into wine are just some of the shots being fired across Australia's bow.
"The mishandling of the virus in Wuhan with the World Health Organization has caused China to be quite concerned about its governance and you know, the best form of defence is attack sometimes," explained economist and trade expert Tim Harcourt, from the University of New South Wales.
But the elephant in the room is iron ore, which is a product China desperately needs for the massive infrastructure and housing projects that are providing the stimulus to keep the world's second-biggest economy afloat.
China's trade attacks have so far steered clear of Australia's biggest export, the value of which is set to pass $100 billion this year.
Despite all the tension between the two countries, iron ore sales to China in the first half of 2020 were actually up more than 8 per cent, with the added bonus for Australia of a higher price.
However BHP, Rio Tinto, Fortescue and Roy Hill are heavily leveraged to China, and would be extremely vulnerable if Beijing decided to give iron ore the same treatment as, for example, barley.
But would it? Indeed, could it?
"We actually supply China with about 60 per cent of their total iron ore consumption," observed Bell Potter analyst Giuliano Sala Tenna.
"So, at the moment, the status quo will be maintained only because we've seen with Chinese foreign policy that they don't tend to do things to their own detriment."
'Heightened risk'
Notwithstanding that, as China looks to make life harder for Australia, iron ore is already on its radar, with new customs protocols which, if enforced, could leave selected shipments stranded at the docks.
Helen Sawczak, who finished up last month as CEO of the Australia-China Business Council, warns that even though resources are lower down on the list of targets, they are not immune.
"I wouldn't take anything for granted," she told The Business.
"I think the risk is heightened.
Longer term, Giuliano Sala Tenna sees even bigger threats to the iron ore trade.
"We've seen China invest into the Simandou [iron ore] project in Guinea," he noted.
"Now, that has a potential production of 150 million tonnes per annum. That will take five to 10 years to ramp up, but that could significantly put downward pressure on the iron ore price."
Australia's arch ore rival — Brazil's Vale — is also on the way back after a collapsed tailings dam smashed its output.
But economist Tim Harcourt does not see these new developments as a major threat.
"Brazil's been completely hammered by coronavirus and had governance issues at the best of times, even without COVID-19," he said.
"China's record in Africa is pretty mixed, as it is in PNG and the Pacific, closer to Australia."
China will 'have to walk all this stuff back'
Ms Sawczak also noted that Australian businesses working in China were well aware of the sovereign risk.
"Australian companies, we've had this threat with China for many years," she said.
"It's something that Rio Tinto dealt with, it's something that Crown Casino has dealt with, but it seems that things are very much heightened this week."
Another consolation for local producers, if you can call it that, is that China's trade hostility is not restricted to Australia.
It is also at war, in a trade sense, with a large chunk of the world, and exporters in places as far flung as the United States, Canada, India and Europe are also feeling the Beijing blowtorch.
Mr Harcourt does not believe this level of aggression can be sustained for long before it hurts China's economy more than it hurts the targets of its wrath.
"Ultimately it's not going to work," he argued.
"So, we are just seeing that process acted out in terms of our own bilateral relationship."
Ms Sawczak says things aren't as bad as they might appear, and she is hopeful that relations will normalise sooner rather than later.
"We're still reaching records in bilateral trade between Australia and China, so Australian companies still remain cautiously optimistic about the great potential of the China market."
By business reporter Andrew Robertson
Posted 4 hours ago, updated26 minutes ago
Australia's relationship with its biggest trading partner, China, has deteriorated rapidly this year.
Key points:
- Australia's iron ore shipments were up 8 per cent during the first half of the year
- China is working on a major African iron ore mine that would add 150 million tonnes to global supply
- Trade experts say China can only maintain its current aggressive trade stance for a short while before damaging its own economy
Huge tariffs on Australian barley, bans on some Australian beef, restrictions on coal and an investigation into wine are just some of the shots being fired across Australia's bow.
"The mishandling of the virus in Wuhan with the World Health Organization has caused China to be quite concerned about its governance and you know, the best form of defence is attack sometimes," explained economist and trade expert Tim Harcourt, from the University of New South Wales.
But the elephant in the room is iron ore, which is a product China desperately needs for the massive infrastructure and housing projects that are providing the stimulus to keep the world's second-biggest economy afloat.
China's trade attacks have so far steered clear of Australia's biggest export, the value of which is set to pass $100 billion this year.
Despite all the tension between the two countries, iron ore sales to China in the first half of 2020 were actually up more than 8 per cent, with the added bonus for Australia of a higher price.
However BHP, Rio Tinto, Fortescue and Roy Hill are heavily leveraged to China, and would be extremely vulnerable if Beijing decided to give iron ore the same treatment as, for example, barley.
But would it? Indeed, could it?
"We actually supply China with about 60 per cent of their total iron ore consumption," observed Bell Potter analyst Giuliano Sala Tenna.
"So, at the moment, the status quo will be maintained only because we've seen with Chinese foreign policy that they don't tend to do things to their own detriment."
'Heightened risk'
Notwithstanding that, as China looks to make life harder for Australia, iron ore is already on its radar, with new customs protocols which, if enforced, could leave selected shipments stranded at the docks.
Helen Sawczak, who finished up last month as CEO of the Australia-China Business Council, warns that even though resources are lower down on the list of targets, they are not immune.
"I wouldn't take anything for granted," she told The Business.
"I think the risk is heightened.
Longer term, Giuliano Sala Tenna sees even bigger threats to the iron ore trade.
"We've seen China invest into the Simandou [iron ore] project in Guinea," he noted.
"Now, that has a potential production of 150 million tonnes per annum. That will take five to 10 years to ramp up, but that could significantly put downward pressure on the iron ore price."
Australia's arch ore rival — Brazil's Vale — is also on the way back after a collapsed tailings dam smashed its output.
But economist Tim Harcourt does not see these new developments as a major threat.
"Brazil's been completely hammered by coronavirus and had governance issues at the best of times, even without COVID-19," he said.
"China's record in Africa is pretty mixed, as it is in PNG and the Pacific, closer to Australia."
China will 'have to walk all this stuff back'
Ms Sawczak also noted that Australian businesses working in China were well aware of the sovereign risk.
"Australian companies, we've had this threat with China for many years," she said.
"It's something that Rio Tinto dealt with, it's something that Crown Casino has dealt with, but it seems that things are very much heightened this week."
Another consolation for local producers, if you can call it that, is that China's trade hostility is not restricted to Australia.
It is also at war, in a trade sense, with a large chunk of the world, and exporters in places as far flung as the United States, Canada, India and Europe are also feeling the Beijing blowtorch.
Mr Harcourt does not believe this level of aggression can be sustained for long before it hurts China's economy more than it hurts the targets of its wrath.
"Ultimately it's not going to work," he argued.
"So, we are just seeing that process acted out in terms of our own bilateral relationship."
Ms Sawczak says things aren't as bad as they might appear, and she is hopeful that relations will normalise sooner rather than later.
"We're still reaching records in bilateral trade between Australia and China, so Australian companies still remain cautiously optimistic about the great potential of the China market."
Its all on paper. Xi has to thread a fine needle to control the vast apparatus that is the China Government. Issue at hand is he is at loggerheads with the military, even though he chairs the committee.
There is no national military In ah tiong land. The so called military is the armed wing of the CCP. So Winnie Xi is safe
of course he is not that strong, but he is that nuts. he's gotta go.
What I am referring to is the CMC (China Military Commision) Xi is wearing many hats, more than anyone has tried to wear. There are rumblings of discontent within the ranks so that is not good for "safety"
https://www.theguardian.com/world/2...ad-opposition-in-his-own-party-claims-insider
China's Xi Jinping facing widespread opposition in his own party, insider claims
I hope the whole CCP gets overthrown. However ah xi is very popular in ah tiong land ...so I think he will be in control like mao
For a nation without a proper airforce and a puny artillery capability compare to the mighty US army, this lousy and ragtag military manage to push the US army to “attack in a different direction” from chosin reservoir back to the 38th line. In fact in the 2 years of fighting, they managed to hold their own against the mighty US military.
The effects of korea war badly scared the USA that they dare not launch ground attack the north Vietnam in fear of another people volunteers army crossing into north Vietnam despite it was the height of the culture revolution in CCP.
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