China Will Crush Us

[PortaJohn]

Let it be known that @red viking believes NPR contributors are non-reliable

[red viking]

1 hour ago, PortaJohn said:

Michael Pettis who has contributed to NPR and teaches in China is non-reliable?

I can't even read the article. Don't have a subscription. I see it discusses low domestic demand. That's long been acknowledged as one of China's biggest problems but nothing that is going to lose the trade war for them when the U.S. is the only country blocking their imports. They export all over the world, so while it hurts them, it won't come close to breaking them. All they have to do is hold out until Trump is out of office, which is Jan 2029 at the latest but he'll run into big problems starting In Jan 2027. 

Edited Wednesday at 08:51 PM by red viking

[JimmySpeaks]

1 hour ago, red viking said:

I don't have a subscription to that non-reliable News source. Show me something objective. 

Translation: only send me sources I agree with 

[red viking]

15 minutes ago, JimmySpeaks said:

Translation: only send me sources I agree with 

LIke I said, I couldn't read it anyway. Like I'm gonna buy a subscription just to read his article? LMAO. 

[Caveira]

3 hours ago, Gene Mills Fan said:

I DONT THINK THEY ARE VERY GOOD AT CHESS

Top 4 Chess Players (FIDE Ratings - April 16, 2025): 

 

1. Magnus Carlsen: (Norway): 2837
2. Hikaru Nakamura: (USA): 2804
3. Gukesh Dommaraju: (India): 2787
4. Arjun Erigaisi: (India): 2782

Ya sure.  But can any of them play the London?

[Caveira]

34 minutes ago, red viking said:

LIke I said, I couldn't read it anyway. Like I'm gonna buy a subscription just to read his article? LMAO. 

Here is a summary 

Michael Pettis, a finance professor at Peking University and a seasoned observer of China's economy, offers a critical analysis of China's structural economic challenges, particularly focusing on the nation's consumption paradox and the complexities of its trade relationships.

The Consumption Paradox

Pettis identifies China's weak domestic demand as a central issue, emphasizing that the country's economic growth has been predominantly driven by investment rather than consumption. Despite China's robust manufacturing sector, household consumption remains disproportionately low. This imbalance stems from the distribution of income within the economy, where households receive a smaller share of GDP compared to businesses and the government. Such a distribution suppresses consumer spending, as households have less disposable income.South China Morning Post+1South China Morning Post+1Reddit

Challenges in Rebalancing the Economy

Addressing this imbalance is complex. Increasing household income would necessitate reducing the shares allocated to businesses or the government, which could face political and economic resistance. Moreover, strategies like raising wages or interest rates to boost household income might undermine China's manufacturing competitiveness, which relies on low labor costs and cheap credit. Similarly, appreciating the renminbi to enhance household purchasing power could make exports less competitive. Thus, the low consumption share is not merely a policy oversight but a fundamental component of China's current economic model.Financial TimesReddit

Implications for Trade and Global Dynamics

Pettis also discusses the global ramifications of China's economic structure. The reliance on exports due to suppressed domestic consumption contributes to trade imbalances, particularly with countries like the United States. He argues that these imbalances are not solely the result of trade policies but are deeply rooted in domestic economic structures.Furthermore, Pettis critiques the dominant role of the U.S. dollar in global trade, suggesting that such a monopoly is unsustainable and contributes to global financial instability.Wikipedia+1South China Morning Post+1Financial TimesFinancial Times+3South China Morning Post+3South China Morning Post+3

Conclusion

In summary, Pettis underscores the need for China to rebalance its economy by enhancing household consumption.However, such a shift would require significant structural reforms, challenging entrenched interests and the existing growth model. The path to a more balanced and sustainable economic framework involves complex trade-offs and a reevaluation of both domestic policies and international trade dynamics.

[PortaJohn]

1 hour ago, red viking said:

LIke I said, I couldn't read it anyway. Like I'm gonna buy a subscription just to read his article? LMAO. 

https://www.msn.com/en-xl/money/other/economist-michael-pettis-on-china-s-consumption-paradox-and-the-pitfalls-of-a-trade-war/ar-AA1BvlFh

[red viking]

57 minutes ago, Caveira said:

Here is a summary 

 

Michael Pettis, a finance professor at Peking University and a seasoned observer of China's economy, offers a critical analysis of China's structural economic challenges, particularly focusing on the nation's consumption paradox and the complexities of its trade relationships.

The Consumption Paradox

Pettis identifies China's weak domestic demand as a central issue, emphasizing that the country's economic growth has been predominantly driven by investment rather than consumption. Despite China's robust manufacturing sector, household consumption remains disproportionately low. This imbalance stems from the distribution of income within the economy, where households receive a smaller share of GDP compared to businesses and the government. Such a distribution suppresses consumer spending, as households have less disposable income.South China Morning Post+1South China Morning Post+1Reddit

Challenges in Rebalancing the Economy

Addressing this imbalance is complex. Increasing household income would necessitate reducing the shares allocated to businesses or the government, which could face political and economic resistance. Moreover, strategies like raising wages or interest rates to boost household income might undermine China's manufacturing competitiveness, which relies on low labor costs and cheap credit. Similarly, appreciating the renminbi to enhance household purchasing power could make exports less competitive. Thus, the low consumption share is not merely a policy oversight but a fundamental component of China's current economic model.Financial TimesReddit

Implications for Trade and Global Dynamics

Pettis also discusses the global ramifications of China's economic structure. The reliance on exports due to suppressed domestic consumption contributes to trade imbalances, particularly with countries like the United States. He argues that these imbalances are not solely the result of trade policies but are deeply rooted in domestic economic structures.Furthermore, Pettis critiques the dominant role of the U.S. dollar in global trade, suggesting that such a monopoly is unsustainable and contributes to global financial instability.Wikipedia+1South China Morning Post+1Financial TimesFinancial Times+3South China Morning Post+3South China Morning Post+3

Conclusion

In summary, Pettis underscores the need for China to rebalance its economy by enhancing household consumption.However, such a shift would require significant structural reforms, challenging entrenched interests and the existing growth model. The path to a more balanced and sustainable economic framework involves complex trade-offs and a reevaluation of both domestic policies and international trade dynamics.

Doesn't refute my claim that US can't single handedly beat China in a trade war. In fact it doesn't appear to discuss the trade war at all. Looks like another strawman by you. 

Edited Wednesday at 10:48 PM by red viking

[PortaJohn]

37 minutes ago, red viking said:

Doesn't refute my claim that US can't single handedly beat China in a trade war. In fact it doesn't appear to discuss the trade war at all. Looks like another strawman by you. 

 

What will be the impact of the new China-US trade war?

It is a mistake to think of this as a US-China trade war. It is much more generalised than that. In the past five or six years, dozens of countries have imposed tariffs or other trade constraints, and we will see a lot more of this until trade imbalances are finally resolved.

The current trade conflict has been inevitable for years, and I wrote about this in my 2013 book, The Great Rebalancing. Joan Robinson, one of the best economists on trade, argued way back in the 1930s that in a globalised system, when a group of countries start running large, persistent surpluses, it's just a question of time before their trade partners begin to retaliate, which is when trade conflict becomes generalised.

They retaliate because trade surpluses are usually created by policies that increase a country's global competitiveness while repressing domestic demand. By running trade surpluses, these countries force the cost of weak domestic demand onto their trade partners. At some point, however, Robinson argued that the trade partners would no longer be willing or able to bear the cost, which typically comes in the form of either higher unemployment or high household or fiscal debt, so they would retaliate with their own trade policies.

 

At the Bretton Woods conference in 1944, Keynes made the same argument, which is why he proposed a global trading system that penalised countries that ran persistent surpluses. He argued that trade and industrial policies that resulted in persistent trade surpluses put downward pressure on global demand, and this downward pressure would lead to rising unemployment and rising debt. This seems to describe the world of the past four or five decades very well, and in my 2019 book (Trade Wars are Class Wars) I showed how it also was likely to worsen income inequality.

The trade conflict we are undergoing, in other words, may represent a major shift in the structure of the global economy - along with a shift in the way we think about economics - a lot like what we saw in the 1970s or in the 1930s.

If that is the case, it means that we are in the midst of a major shift in the structure of the global economy. Our previous experiences in the 1930s and the 1970s suggest that we won't be able to predict what kind of world will emerge in the next decade or so, but we can be very sure that it will be very different from the world of the past several decades. The key for the success of most countries is how quickly they can adjust to the change in conditions. If they can adjust sustainably, they will emerge from this process in relatively good shape. If not, they will find it very difficult.

 

Will trade and supply chains become more regionalised? What will the US' role be in globalisation?

They probably will, at least in the near term. We live in a world with historically unprecedented levels of trade imbalances, and these are neither normal nor sustainable. In a well-functioning global trading system, countries export to pay for imports, and by specialisation, this increases global output. In our world, many countries export to pass on the costs of weak domestic demand. Trade conflict means that we are returning to a world with smaller imbalances and less subsidising of supply chains, which may mean less trade.

One of the key changes will be a change in the global role of the US dollar. There have been many discussions about which currency could replace the US dollar as the global reserve currency if it no longer holds that position, which is a stupid question.

 

At no time in history has any currency played the role of the US dollar - this is a complete anomaly and it's unsustainable. If the US dollar reduces its role in global trade - and I hope that happens relatively quickly - it will not be replaced. It is far more likely that we move to a world of multiple trading currencies.

We keep forgetting what we used to know very well - that in a globalised world, every country must choose between more global integration or more control of its domestic economy. A fully integrated global economy can only succeed if all nations retain open trade and capital accounts and refrain from domestic industrial policies that affect the external account.

But if several major economies opt for more control of their domestic economies, and implement policies that lead to large, persistent external imbalances, they force their more open trade partners to absorb those imbalances by changing the structure of their own economies. A country like Brazil, for example, wants to expand its manufacturing sector and reduce its dependence on commodity exports, but given its role in the global trading system, it has seen the opposite happen.

 

These problems have been building through the 1990s and 2000s, but as the consequences of these imbalances have got worse, many countries in the world that once supported globalisation have now decided that they want to regain control of their domestic economies. This means less open trade and capital accounts, whether this comes in the form of tariffs or other kinds of policies.

The role of the US here is particularly important. Since the 1980s, the US chose to play a role - partly for Cold War geopolitical reasons, and partly for the benefit of Wall Street - where it was going to accommodate the imbalances of the rest of the world by leaving its capital account completely open to the needs of countries to acquire foreign assets to balance their surpluses.

The result was half of the excess savings in the world being absorbed by the US for decades, with half of the rest being absorbed by the UK, Canada and Australia, whose financial markets are very similar to that of the US. Of course the flip side of capital inflows is the trade deficit, which is why the US role as global consumer of last resort is simply the flip side of its role of absorber of last resort of excess global savings.

 

If the US (along with the UK, Canada and Australia) now decide that they are unable or unwilling to continue playing this role, the consequences for global trade are enormous. If the countries accounting for most of the global deficits refuse to continue running deficits, either the surpluses of the large surplus countries collapse or the deficits of the rest of the world explode, or both. Either reaction will be terribly painful.

[Scouts Honor]

everyone is blind they won't read my sources.

everyone giving me sources to read is stupid

[red viking]

12 hours ago, PortaJohn said:

 

What will be the impact of the new China-US trade war?

It is a mistake to think of this as a US-China trade war. It is much more generalised than that. In the past five or six years, dozens of countries have imposed tariffs or other trade constraints, and we will see a lot more of this until trade imbalances are finally resolved.

The current trade conflict has been inevitable for years, and I wrote about this in my 2013 book, The Great Rebalancing. Joan Robinson, one of the best economists on trade, argued way back in the 1930s that in a globalised system, when a group of countries start running large, persistent surpluses, it's just a question of time before their trade partners begin to retaliate, which is when trade conflict becomes generalised.

They retaliate because trade surpluses are usually created by policies that increase a country's global competitiveness while repressing domestic demand. By running trade surpluses, these countries force the cost of weak domestic demand onto their trade partners. At some point, however, Robinson argued that the trade partners would no longer be willing or able to bear the cost, which typically comes in the form of either higher unemployment or high household or fiscal debt, so they would retaliate with their own trade policies.

 

At the Bretton Woods conference in 1944, Keynes made the same argument, which is why he proposed a global trading system that penalised countries that ran persistent surpluses. He argued that trade and industrial policies that resulted in persistent trade surpluses put downward pressure on global demand, and this downward pressure would lead to rising unemployment and rising debt. This seems to describe the world of the past four or five decades very well, and in my 2019 book (Trade Wars are Class Wars) I showed how it also was likely to worsen income inequality.

The trade conflict we are undergoing, in other words, may represent a major shift in the structure of the global economy - along with a shift in the way we think about economics - a lot like what we saw in the 1970s or in the 1930s.

If that is the case, it means that we are in the midst of a major shift in the structure of the global economy. Our previous experiences in the 1930s and the 1970s suggest that we won't be able to predict what kind of world will emerge in the next decade or so, but we can be very sure that it will be very different from the world of the past several decades. The key for the success of most countries is how quickly they can adjust to the change in conditions. If they can adjust sustainably, they will emerge from this process in relatively good shape. If not, they will find it very difficult.

 

Will trade and supply chains become more regionalised? What will the US' role be in globalisation?

They probably will, at least in the near term. We live in a world with historically unprecedented levels of trade imbalances, and these are neither normal nor sustainable. In a well-functioning global trading system, countries export to pay for imports, and by specialisation, this increases global output. In our world, many countries export to pass on the costs of weak domestic demand. Trade conflict means that we are returning to a world with smaller imbalances and less subsidising of supply chains, which may mean less trade.

One of the key changes will be a change in the global role of the US dollar. There have been many discussions about which currency could replace the US dollar as the global reserve currency if it no longer holds that position, which is a stupid question.

 

At no time in history has any currency played the role of the US dollar - this is a complete anomaly and it's unsustainable. If the US dollar reduces its role in global trade - and I hope that happens relatively quickly - it will not be replaced. It is far more likely that we move to a world of multiple trading currencies.

We keep forgetting what we used to know very well - that in a globalised world, every country must choose between more global integration or more control of its domestic economy. A fully integrated global economy can only succeed if all nations retain open trade and capital accounts and refrain from domestic industrial policies that affect the external account.

But if several major economies opt for more control of their domestic economies, and implement policies that lead to large, persistent external imbalances, they force their more open trade partners to absorb those imbalances by changing the structure of their own economies. A country like Brazil, for example, wants to expand its manufacturing sector and reduce its dependence on commodity exports, but given its role in the global trading system, it has seen the opposite happen.

 

These problems have been building through the 1990s and 2000s, but as the consequences of these imbalances have got worse, many countries in the world that once supported globalisation have now decided that they want to regain control of their domestic economies. This means less open trade and capital accounts, whether this comes in the form of tariffs or other kinds of policies.

The role of the US here is particularly important. Since the 1980s, the US chose to play a role - partly for Cold War geopolitical reasons, and partly for the benefit of Wall Street - where it was going to accommodate the imbalances of the rest of the world by leaving its capital account completely open to the needs of countries to acquire foreign assets to balance their surpluses.

The result was half of the excess savings in the world being absorbed by the US for decades, with half of the rest being absorbed by the UK, Canada and Australia, whose financial markets are very similar to that of the US. Of course the flip side of capital inflows is the trade deficit, which is why the US role as global consumer of last resort is simply the flip side of its role of absorber of last resort of excess global savings.

 

If the US (along with the UK, Canada and Australia) now decide that they are unable or unwilling to continue playing this role, the consequences for global trade are enormous. If the countries accounting for most of the global deficits refuse to continue running deficits, either the surpluses of the large surplus countries collapse or the deficits of the rest of the world explode, or both. Either reaction will be terribly painful.

Good article. Doesn't refute anything I said, such as who wins trade war.  It even says "its more likely that we move to a world of multiple trading currencies." This diminishes the value of the dollar and the dollar would no longer be THE reserve currency of the world. 

[JimmySpeaks]

1 hour ago, red viking said:

Good article. Doesn't refute anything I said, such as who wins trade war.  It even says "it’s more likely that we move to a world of multiple trading currencies." This diminishes the value of the dollar and the dollar would no longer be THE reserve currency of the world. 

The article also states that that the US being THE reserve currency is a complete anomaly and unsustainable.  And that it was inevitable that this was going to happen.  As America will, China will benefit long term by becoming more self sufficient and less reliable on trade.  Globalization requires it.  And no where in the article does it say your theory is a good one.  
 

America will prevail.  China will remain where it is in the worlds hierarchy 

[Bigbrog]

1 hour ago, red viking said:

Good article. Doesn't refute anything I said, such as who wins trade war.  It even says "its more likely that we move to a world of multiple trading currencies." This diminishes the value of the dollar and the dollar would no longer be THE reserve currency of the world. 

  Do you ever get sick of being wrong??  And have you ever in your life been like..."yeah, I guess I was wrong on that"...my guess is no.

You remind me of the young relative that is overly opinionated (and wrong) on everything that no one wants to invite to Easter dinner.

[jross]

China is competing hard for the future of AI, and the leaders in AI will dominate the world.  A CIA cyber security agent told me this morning that China is spending 2T+ on AI for 2030.  This is a force multiplier for the GDP and military... but the USA will still be tops in 2030 regardless of the noise here.

[red viking]

4 hours ago, Bigbrog said:

  Do you ever get sick of being wrong??  And have you ever in your life been like..."yeah, I guess I was wrong on that"...my guess is no.

You remind me of the young relative that is overly opinionated (and wrong) on everything that no one wants to invite to Easter dinner.

Hmm. Maybe you need to brush up on reading comprehension. I said that we are in danger of losing our status as THE reserve currency of the world. The article you provided confirms that we are going in the direction of MULIPLE reserve cutlrrencies, implying that we would lose our status as THE reserve currency. 

[Husker_Du]

On 4/16/2025 at 8:39 AM, red viking said:

I respect them as a powerful country. Wouldn't want to live there but they aren't a country to screw with, particularly when you're doing it on your own. 

i feel like you're only saying this b/c you think the Chinese are reading your posts

[red viking]

1 hour ago, Husker_Du said:

i feel like you're only saying this b/c you think the Chinese are reading your posts

I think they are. They've taken all my advice so far, except increasing their tariffs on u.s. to 200%, but close enough. 

I haven't told them to dump their u.s. treasuries, but they will if I recommend it. 

Edited Thursday at 07:45 PM by red viking