Posted on 10/09/2021 7:27:53 PM PDT by TigerLikesRoosterNew
China’s Unstable Political Economy
Evergrande’s collapse is a sign of deeper weakness, just when Xi is impatient to challenge the U.S.
By John Lee
Oct. 6, 2021 5:27 pm ET
The world has been watching as the Chinese real-estate giant Evergrande flails, and some have been asking whether Beijing will soon have a moment akin to 2008’s collapse of Lehman Brothers in America. Xi Jinping may manage to prevent the burst of the real estate bubble, but China’s economy isn’t heading for more-sustainable growth. Evergrande’s woes are a reminder that China’s political economy under Mr. Xi has become even more unstable, even as Beijing grows more impatient to displace America as the dominant power. Time is not on China’s side.
The global financial crisis that began with the collapse of Lehman Brothers in September 2008 led to a severe liquidity crunch as financial institutions lost faith in the capacity of one another and commercial firms to repay their loans. China’s financial system doesn’t work this way. Loss of faith in the commercial worthiness of other entities isn’t fatal. Instead, banks and other financial institutions unfailingly lend if instructed to do so by political masters.
This happened in 2008, when Chinese state-owned banks injected about $15 trillion of new capital into the economy for fixed-investment projects over the next six years, as export markets in North America and Europe stagnated. This was about 1.5 times the size of the entire American commercial banking system at the time. Politically driven lending has been a feature of the Chinese political economy ever since.
(Excerpt) Read more at wsj.com ...
It may not be necessarily bad for Xi, though. He could blame it on those greedy and corrupt businesses and use it to go after his political enemies, who control the businesses. In the process, he wants to fashion himself as a fighter against corruption again. He is after gaining absolute power. He may believe he can counteract economic fallout with indoctrination and propaganda with the slogan of a fair society sharing wealth.
“Chinese state-owned banks injected about $15 trillion of new capital into the economy”
I posted this here about a month ago. It made me laugh when financially illiterate gold bug types would claim the dollar would be replaced by the yuan due to Bernanke’s money pri ting. The CHICOMS printing made Bernanke look like a hard money guy.
That’s something I’ve come to understand in the last few years, that as messed up as we are, we seem to be the least messed up of the major currencies. It’s a heckuva thing.
War is a great way to get out of that dilemma temporarily.
There a saying when you trade forex, “The dollar is the best of breed in an ugly dog contest”.
Communist state owned companies are notorious for slushing their money around between themselves, as needed, just as they’ll do here to save Evergrande.
It’s actually why there was always a cardinal rule among the Western nations not to trade with China, up until Clinton gave them WTO status, as they will (and do now) take the profits from lower tech industries, and then slush that money around to use it as new capital to compete with (and ultimately capture) our high tech industries. It was all very predictable, but out politicians and businessmen sold us out for personal profit, and “the great sucking sound” continues to this day.
All economies are political. Economics and politics are really the same thing.
Nice. Yeah, that says it!
As I like to say, K Street and Wall Street have been selling out Main Street to China for the last 30 years. And as you note, it is still going on.
The real problem with Chinese industry is that it is coordinated with their geopolitical agenda. Business is part of their overall warfare. It is a war not a business. They are willing to take enormous initial loss to achieve it, a lot more than other businesses would. It is part of invasion and occupation process. It could be a territory, industry, or total surveillance of another country. They want to turn the whole world into their vassals.
Bkmk
On the other hand, military conquest can bring in spoils and it would be more than enough to offset such a problem. As far as I can see, an enduring system is the the marriage between big business and political power, a so-called crony capitalism. It is everywhere in developing countries. It is an inefficient economy but a common sight. It may be a stable system of political economy in that, left to unattended, the society will settle into this arrangement.
As an aside, if political power can easily dictate business, it could have an ominous dimension. Business can be weaponized. This is what Chinese are doing.
Economics and politics intersect continuously. Look at how many of the right foolishly fight tariffs now. When in fact the tariff was the key plank in the GOP platform until globalist Free Traitors took over the party.
Once you have a taste of utopianism, it tends to stay. Hence, you leave one kind of utopianism only to worship another.
Red China’s economy...on the rocks. Good news.
And on another headline I see:
Energy crisis grips the world: Lebanon runs out of power, India warns its coal-fired plants could go dark in just three days, blackouts hit China and gas prices soar in Europe
Firewood is your friend. Every mature birch tree I cut last summer ( 26 inches across the stump) came down with a mantra....F**K you OPEC!
Toasty warm we are for less than 100.00 worth of fuel and a bucket of sweat.
My fuel equipment has nothing to do with drilling, : 2x 60 cc chain saws, a wood splitter, and two pulp hooks.
Been doing it ever since the first fuel crisis in 1977. Let the Arabs and Russians stew in their own pot.
Soon Biden’s EPA will outlaw wood heat. Too much carbon foot print? Yet, it won’t touch me here. Let the commie asshats proceed apace to destroy the middle class.
Today its Thanksgiving Day in Tardeau world. Today we hoist the 25 pound, extended family turkey and get ready to watch the deer hunt starting next week.
My son in law’s two British Mastiffs got two HUGE raw steer femurs.Happy, happy dogs. They’ll knaw what they can and bury them to cook them and soften them up.
The rest of the socilialist bizarro world has gone completely fuelish as Biden and Tardeau work hand in hand to ruin Enbridge.
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