China

borg, if your books lean heavily into the mandate of heaven then drop them and find new books

it's basically a made up thing, something that was just some really obscure thing barely referenced or mentioned

for example let's take some really obscure thing from US history such as the fact that celebrating Christmas was made illegal in Massachusetts in 1659

now imagine we are visited by some aliens who have an entire religion based around hating christmas - their entire purpose for visiting is in the role of a missionary to convert the american population - but americans don't really see much of value in this religion because they either like christmas, are indifferent about christmas, or they specifically don't like christmas due to an unshakeable belief in a different religion - so not much of anyone is converting

however, the aliens who came to America are so zealous, that they are confined by confirmation bias, they see hope of conversion in everything

and they are also writing a history of America which they send back to their planet and is widely read by the alien scholars back home - the americans have no interest in translating their own works so any information the aliens can comes through the lens of the missionaries they sent to us

the missionaries also feel that american history is exhaustive, and translating the work is incredibly time consuming and difficult, so they instead read vast volumes and just annotate it themselves

as they are confirmation bias seeking missionaries, they have run across an old and never enforced massachusetts law from 1659, despite that the reality is that literally nobody knows nor cares about this law - the aliens latch onto it deeply and have it underpin most of their work because they are obsessed with the fact that there's a law banning christmas because to them that shows that deep down these godless heathen americans know in their heart of hearts that christmas indeed sucks and will on day follow their religion

many centuries later, modern alien scholars continue to write about how americans all hate christmas because they never learned to read english and instead just read the works written by the missionaries in their own language, which leaned heavily into the idea that americans all hated christmas

this is exactly what happened with the "mandate of heaven" - the jesuits struggled to convert the chinese, but because of the "mandate of heaven" they saw hope that deep down all chinese inherently believed in a higher power that is god

you can see in the english wiki it's page after page

https://en.wikipedia.org/wiki/Mandate_of...

in the chinese wiki it's a blurb

https://zh.wikipedia.org/wiki/%E5%A4%A9%...

normally the chinese version of wikipedia for anything historical is much longer and more exhaustive than the english version (same for all stuff about other countries ie if you read about french or russian revolutions the wiki pages in those languages are far more exhaustive)

i also mentioned it earlier in the thread, but strongly rec read reading Mao the Untold Story - i wrote about that here https://forumserver.twoplustwo.com/showp...

https://www.nytimes.com/2024/08/20/us/po...

https://archive.is/gK49G

Biden Approved Secret Nuclear Strategy Refocusing on Chinese Threat

It is rare that I get to point to a highlight in the Chinese news as I only really follow Economic news and
it is generally bad.

Black Myth Wukong a first person video game made by a Chinese developer released this week is breaking records.

I used to play Dota2 a long time ago and Monkey is one of the hero choices.

Sun Wukong - Monkey is famed for his adventures in 'Journey to the West"
Believe it or not, this 1000's of years old story was set up exactly to fit a modern day linear style Video game.
Get sent on a mission to protect 3 other companions and retrieve the relics/scriptures from the West (India / Buddha in this case)
On the way, meet various shape changing demons, spellcasters, tricksters, and seducers and other mini bosses.
I have a 40y old book with one of of those adventures.

it seems to be becoming a new trend, my parents are reading journey to the west now as part of their book club, super annoying that this new trendy translation is just called "monkey king"

it's like doing a new translation of the illiad and just calling it "achilles"

btw a lot of games you play are made by chinese developers - including some of the most popular ones out there

npr had a really good story that i heard while driving the other day

https://www.npr.org/transcripts/nx-s1-50...

I listened to a podcast on the future of naval power recently, and the algorithm picked up on it and I have been getting a lot of posts on X on the topic. Very bleak. The US has completely offshored its ship building capacity to China, and China has already started to slowly cut us off.

And at this point if we even tried to rebuild our domestic ship building capacity it would take decades, and there is no guarantee we can recapture expertise that has been lost or compete technologically in innovating new naval military capabilities.

And there is no political will to even try. Our political elites are completely controlled by Wall Street and short term economic gain; so as long as it is cheaper to rely on Chinese production there is no will to change the current paradigm. And China is well aware of this, so they can just string us along and weaponize our own short term shortsightedness and greed against us.

this can be applied to basically every interaction we have with china - they are always looking at 20+ years down the line whereas we look at the here and now, they know this, we know this, but they are the only side exploiting those asymmetric goals

i've long lost faith in our government, find them totally inept and incompetent and any mid level paper pusher is just taking orders from a presidential appointee who is there because he helped swing Ohio or was a big donor

https://warontherocks.com/2024/08/there-...

Germans and South Koreans got hands on deck to take over anytime for a whole lot of the production process. The US is still decades (not exaggerating) ahead of everyone else in terms of aircraft carrier and nuclear attack subs technology. It's just gotten astronomically more expensive to put the technologies into real ships due to lack of economies of scale.

aircraft carrier yes - but that's because no other country is willing to spend resources on pursuing that because the cost of training and maintaining a single aircraft carrier strike force is larger than the entire military budget of most of the world

a single nimitz class aircraft carrier costs 4.5 billion to construct and a little less than a billion dollars in operating costs during normal non-warfare settings

this is of course assuming that you have the production facilities already (nobody else does) and the facilities to train the crew and pilots (nobody else has that either) so it's going to be a far greater investment that only sort of makes sense when you have 11 of them as we do

furthermore, an aircraft carrier by itself is a sitting duck, it'll require an escort of a minimum of 5-6 to handle the various niches of anti air, anti sub, & anti ship

not to mention supplying them, signing treaties with countries around the world to allow them to dock at foreign ports, etc etc

so this is why we're so far ahead, because it just doesn't make sense for anyone else to spend that kind of money investing in it

it's not at all a question of capability but a question of doctrine

as far as subs, i'm sure we're ahead, but then again, decades is a bit absurd of a claim to make

I still remember president XI's outrage and his eventual crackdown of winnie the pooh over the stupidest **** imaginable.

The leader of a massive yet unsurprisingly diminishing country handles criticism as if he were Donald Trump.

this is one of many things reported widely that never happened

Scouring folks social media accounts to remove both pics and statements comparing a fictitious cartoon character of a bear to the looks of you is the most authoritarian, resentful and yes the stupidest **** imaginable when your the prez of a country that controls nearly a quarter of the world population.

That alone while completely ignoring all the other **** he very likely pulled involving the fluffy bear is straight laughable.

On the risk of war with China soon:

I do not to follow politics and military strategy and try to stick to Macroeconomic trends that have a economic fallout effect on the rest of the world, especially in Canada and USA.

Sometimes they cannot be avoided because a country's foreign policy RE war: has an economic effect:

Ie. Because Real Estate is where a large % of Chinese store their wealth, when the RE market started falling in China, I looked at where they were putting their money.
1) more RE... no.. RE is still falling 2.5 years after peak. Around Apr 2022
2) Chinese equity market. .. no is also still falling. Shanghai index 3600 Jan 2022, is 2800 today and still declining.
3) leave the country.. yes.. only for very wealthy (but look where they are going and invest there.)
Businesses, that is Viet Nam, Indonesia and India.
RE investors.. I think I talked about this before. Thailand, Japan, UAE!! that one surprised me, but I guess that is where the ultra wealthy invest. USA etc.
4) Gold... the average person in china can buy gold- pay a premium on 10g mini bars or 1oz coins, but definitely yes they are storing their wealth there to 'preserve wealth.'

From the reports I was reading early this year, China was buying gold by the ton... One of the reasons to buy gold is to prepare for war. Russia did this before Ukraine. Ie. you can freeze Russia's accounts in foreign banks but not their physical gold reserves. Anyone/Everyone will take gold and not know/or care where it came from. This is not a discussion on military stuff, (i know 0 about that) but you can see the fallout of why things are happening (Macroeconomic forces) and get there before the general population catches on.
So.. I started buying more gold at the beginning of this year went from 2200 to +$2500. My reasoning was because of the 1-2-3-4 store of wealth, but the 'prepare for war' was just a side note with the effect adding in the same direction as the store of wealth.

Most of my interests (ie Real Estate) calculations have many more forces with cross effects and it takes a lot of research to see which of the effects has the most impact and why. RE... interest rates, inflation, party in Government, Government's policy on Capital Gains, government's policy on Rentals, Government policy on rent increases, birth rates, legal immigration, illegal immigration, inter provincial or interstate migration, job creation, local infrastructure projects, tax rate, property tax rate, developer incentives, crime rates, the list goes on an on. The three strongest of these IMHO are inter provincial/state migration, Job creation and government policy on rent increases.

I also am concerned that there will be an inflationary trend in China in the coming 5 years. The interest rate is too low and nobody (Chinese banks) are not buying Chinese Bonds but now are forced to. (listen to the attached video) 79% of bonds are owned by SOEs, and I am guessing 20% non State banks.
Banks are in a sorry state having loaned a ton of money to foreign Nations for infrastructure development or local RE developers. Many of these developments have turned bad and will be on the bad debt list. With every investment there are risks and the SOE banks that loaned out the money are not getting any cash payments as expected. The banks might have utilized a failure risk of 2-3% but because of externalities it has jumped to 20-25%. When I say externalities, they can include black swans like Covid or the very common.. corruption in foreign governments when signing infrastructure projects. The questionable governing party in the foreign Country takes large bribes to agree to a new port development in their country that doesn't have any exports to speak of.


Not sure how China will handle the Developer Bankruptcies, but with foreign investment China can settle for long term port leases, mining rights or + votes in the UN assemby in lieu of payment. Again I am not into the politics of the loans, only that they failed and the banks have to write off large losses.
I am well versed in the Economics of printing money. It causes inflation and is a hidden tax.
One of the key problems for China is that only Chinese holders of Yuan suffer the hidden tax. SOEs, and other Chinese Banks.
Because the US is the reserve currency, and everyone holds USD, every time the US prints more money, everyone that holds USD has a fractionally smaller amount of value (suffers).
Japan 1.1T, China 700B, UK 700B, etc.. about 7-8T total.

https://www.youtube.com/watch?v=-ToTeJgt...
Rick, do you have any background in Economics or Finance? I weight your comments more heavily if you understand how the Bond market and secondary bond markets work. If you do comment on this post, please listen to the 11 minute clip. I would be interested in your thoughts of the commentators report and his conclusion. I believe his report is all factual, but I want to know what you think of his conclusion.

not really, i'd like to think that i know more about it than the general public does but when i listen to a planet money podcast, i'm in absolutely no position to question anything they say and if they say one thing or the other about the bond market i just take it as legit - not that i'd say that planet money is necessarily making stuff up - but i think the real test of knowledge in something is if you can consume whatever translation of it comes through a journalist and immediately know whatever oversimplifications they used which sometimes change it enough to no longer be accurate

however, i do know that the central bank stepping in to bailout bad debt etc for the good of the country is a standard play they've always done so that report isn't anything knew, perhaps it is in scale or scope but in general the central bank is often bailing out various things - ie when china wants to really promote a new industry, they'll flood it with easily accessible loans which have low interest and then bail out the banks who wound up giving out loans to automotive companies which failed and when they began that policy they understood completely that there'd be a lot of bad investments along the way but they wanted to have a stronger auto industry

your source is once again a falungong cult member though so he has an agenda to absolutely paint everything in a CCP bad conclusion

https://www.wsj.com/articles/SB119508926...

his thesis is they are engaging in money printing, which wouldn't surprise me, but that's not because it's "bad" but rather what every country does in times of downturn, USA#1 included

a lot of the stuff he just says is pretty lol - "the central bank of china can hardly be considered an independent entity" - well duh, it's an authoritarian state, you think for one second the top leadership is going to be at the whims of some central banker?

i mean we're talking basic china 101 that anyone studying it in college would learn on day one and he's treating it some huge secret that he's exposing - we're talking about a government that is so paranoid of local power and lower level branches being too independent that they keep certain areas directly under central government control

i'm color blind so don't know if there's multiple colors there, but you'll see beijing, tianjin, shanghai and chongqing are all separate colors (the others are regular provinces and semi-autonomous provinces because there's massive non-han chinese populations there), those are because those are not part of their surrounding provinces but instead little mini-provinces under direct central government control - the reason for this is simply paranoia - beijing is where the government is so they didn't want some local guy who didn't answer to them being in charge of police etc and could be in a position to use them to launch a coup d'etat (this is not new to china, beijing is the only major city in the world that has no natural lakes or rivers, it only exists because it lays in a strategic pass any invaders from the north would need to pass through in order to attack or raid the central plains heartland to the south, this meant that the largest, most capable army in china would be stationed in beijing and so they just moved the capital to that military outpost because it's better to be in direct control of it yourself instead of handing it over to someone who may use it against you so they just diverted water to beijing to support the city that would grow there)

likewise, tianjin is the port city which supplies beijing with everything it needs, so they don't want some uppity governor think he can exert pressure on beijing with a blockade and thus tianjin is under direct control as well

shanghai is the wealthiest and most important city in china, so that had to be under direct management

and chongqing is the safest place from invasion in the entire country, it's surrounded by mountains on all sides and where the nationalists fled when the japanese invaded - so it's not only where everyone important would relocate in times of war with ussr or usa, but that's also where they put their military industrial complex to keep it safe, so again, they couldn't let that bunkered city that produced all their tanks and rockets to be under the control of someone who may decide to use those bunkers and tanks for himself

you get the point, everything in china is under direct control one way or the other, so it's just kind of dumb to be like "did you know the central bank is not independent?"

so i'm noticing a trend here where what he says on the surface is accurate, but the way he interprets/spins it is deeply misleading imo

yes they are buying their own debt to increase the money supply, but no, that won't lead to the country failing catastrophically

i mean, there's always a non-zero chance of that, but by and large they have very intelligent people guiding these policies, they are not afraid to recognize when they were wrong and reverse policy (we see this a lot, most famously with turning back the one child policy, something that reversing was very politically dangerous as they are basically telling all those people who weren't allowed more than one child "oopsies we were wrong but too late" whereas i think a north korean type regime wouldn't reverse something like that until there was a change in regime and the new dictator could blame it on the old but here we can't because everything is "the party")

but importantly, because it's all government working with government - they can essentially bail themselves out and then operate on austerity to weather the storm until things rebound much in the way our government bail out airlines, banks and the auto industry once every couple decades and then they always rebound making record profits until they make another mistake in a bad economy again

so i see a lot of margin for error for china where they can have downturns but weather the storm

they also always plan things for 20-50 years in the future and will account for any risks, if some falungong dissident is able to see what's around the corner, then they surely do as well and are already taking proactive measures to adapt to it

ie the main thing is too many people fail to recognize the deus ex machina of having a state the size of china as your benefactor - how it can just feed and prop itself up to survive short term pain - everyone who knew anything about real estate and bubbles has been screaming to the high heavens that china's real estate was a bubble about to collapse for the last 20 years, right now it's in the worst phase it's ever been in, prices are 15% lower than they were pre-covid which is pretty close to our subprime crisis where home prices dropped by 30%, so one could say they're already in it right now - no things are not good, but if you still bought in 2008 when everyone was screaming "it's not sustainable" you'd still have gotten a good 3x on your investment if you sold today

so i think they are in the "ok we made some bad decisions and market is finally reacting" stage but that's probably a good thing for the overall health of the market long term

but this right here is just lololololololololol

dude is talking about what was literally the single fastest growth out of poverty in the entire history of the known world and he still paints it "times were terrible, there was extreme poverty and everyone was bankrupt but they got bailed out by the wto" so the guy has absolutely no credibility imo

i do think the main points and facts he's saying are at heart accurate, but his analysis is too tainted by cult "take down ccp" propaganda

The regulatory crackdown that ****ed over start up darling Jack Ma killed off their innovation sector.

Pretty sure most Chinese start ups were extractionary fugazi anyways

Good read:

the us hq'd vc firm i sometimes work with that used to specialize in china based startups starting expanding to elsewhere in the world and then later pulled out entirely a few years ago

Where did your ex-company expand to? Just one more data point for me to consider.