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Soviet Collapse Echoes in China’s Belt and Road

bloomberg.com

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Re: Soviet Collapse Echoes in China’s Belt and Road

#101

Post by consumer451 »

doombolt wrote: post #81
consumer451 wrote: post #75

Earlier quoted context omitted.

The USSR also had many satellite nations, like the Eastern European block. Moscow was known to drain those countries' resources, with little local investment in return outside of military bases. I only have personal anecdotes to back that up having grown up in one of those satellite countries.

Actually, all of those states had higher standards of living than core USSR and also access to this huge Soviet market. Didn't do much good since communism is so bad, but still. After the collapse of the Bloc most of those countries lost their industrial capacity, some have not yet recovered, some only recovered on outsource.

That may be true, but it does not invalidate the idea that resources were drained from the satellite nations. How the USSR chose to spend those resources seems to have been to invest in the military and expansion of the empire while ordinary Russian citizens were left to "eat grass."

Re: Soviet Collapse Echoes in China’s Belt and Road

#102

Post by oblio »

factsaresacred wrote: post #92
Barrin92 wrote: post #28

I don't see any justification for the Soviet analogy other than wanting to conjure up the image of the impending collapse of China. This sounds like the infrastructure version of the 'financial bubble' prediction that crops up every other year. If one wanted to pick a positive story there would be the example of the American progressive era, the creation of the interstate system, the railway system during the 19th ce…

> it obviously makes sense to invest into continental infrastructure because it does not control the sea. Easier and cheaper to pursue a Blue Water Navy than pump money into questionable projects in corrupt States -- projects who's success is anything but assured (See Malaysia PM planning to cancel all Chinese projects and the mess in Pakistan as recorded by WSJ recently). > someone needs to build infrastructure, aft…

The money also buys you influence and good will from the locals (usually), which I imagine China also probably wants.

And when did a Blue Water Navy become cheap? It's one of the most expensive military investments, especially if your plan is to break a potential US blockade.

Re: Soviet Collapse Echoes in China’s Belt and Road

#103

Post by myrandomcomment »

mr_toad wrote: post #65
Gibbon1 wrote: post #48

Earlier quoted context omitted.

> Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say. My feeling is business people and economists are upset that China utterly refuses to follow neoliberal economic polices. Preferring instead to follow old school Keynesian policies. Policy makers thus view China…

China’s external debt to GDP is one of the lowest in the world, as is their debt per capita. They aren’t going to be ‘punished’ by creditors because they don’t have significant debt. In fact, it’s more likely that China will be the one doing the punishing down the road.

The issue is the China's corporate debt and off book debt to government owned / backed companies. They have $3.12T coming due in the next year.

For example:

https://www.bloomberg.com/news/articles/2018-07-18/a-china-b...

Re: Soviet Collapse Echoes in China’s Belt and Road

#104

Post by User23 »

sonnyblarney wrote: post #100
User23 wrote: post #98

Earlier quoted context omitted.

This is hard to wrap one's head around, so let me try again with some more detail. The US doesn't sell TBills. It creates those interest bearing IOUs ex nihilo, and then swaps them for reserves (also created ex nihilo) with the Federal Reserve. Primary Dealers buy treasuries from the Fed, not from the treasury.[1] The process is absolutely nothing like going to a bank or anyone else to borrow money. [1] https://en.wi…

Yes, I get it - but the mechanism does not matter: TBills and TBonds US government debt. US dollars are a form of debt to the US economy. So If you hold TBills/TBonds, the US government owes you money. If you hold USD, then the US economy owes you 'stuff' that you can exchange those dollars for. Anyone who holds TBills/TBonds is lending to the US Government. China holds a lot of both, ergo the US is indebted to them…

"the mechanism does not matter" only if you have no interest in understanding how the system actually works.

China isn't the US's lender and they do not make any loans. They can't foreclose, because no loan exists. All they can do is take their coupons or sell the security to someone else who will do the same.

China can't starve the Treasury of money because the Treasury exclusively borrows reserves from the Federal Reserve.

Also worth noting is that with the stroke of a pen Congress and the President acting in concert could restore the Treasury's power to spend money into existence directly. The US creates securities as a matter of public policy, not because it actually needs them to finance itself.

Re: Soviet Collapse Echoes in China’s Belt and Road

#105

Post by doombolt »

consumer451 wrote: post #101
doombolt wrote: post #81

Earlier quoted context omitted.

Actually, all of those states had higher standards of living than core USSR and also access to this huge Soviet market. Didn't do much good since communism is so bad, but still. After the collapse of the Bloc most of those countries lost their industrial capacity, some have not yet recovered, some only recovered on outsource.

That may be true, but it does not invalidate the idea that resources were drained from the satellite nations. How the USSR chose to spend those resources seems to have been to invest in the military and expansion of the empire while ordinary Russian citizens were left to "eat grass."

No, it does. Manufactured goods are not "resources". Those are made for selling, and in modern world markets for goods are considered more of a gift than goods themselves.

Are they not? Does USA drain resources from China?

Re: Soviet Collapse Echoes in China’s Belt and Road

#106

Post by factsaresacred »

oblio wrote: post #102
factsaresacred wrote: post #92

Earlier quoted context omitted.

> it obviously makes sense to invest into continental infrastructure because it does not control the sea. Easier and cheaper to pursue a Blue Water Navy than pump money into questionable projects in corrupt States -- projects who's success is anything but assured (See Malaysia PM planning to cancel all Chinese projects and the mess in Pakistan as recorded by WSJ recently). > someone needs to build infrastructure, aft…

The money also buys you influence and good will from the locals (usually), which I imagine China also probably wants. And when did a Blue Water Navy become cheap? It's one of the most expensive military investments, especially if your plan is to break a potential US blockade.

> influence and good will from the locals

No good deed goes unpunished. And in this case, the deeds often aren't even good. Locals from Ghana to Bangladesh complain about how China brings in their own workers rather than employ locals, and how the end result is shoddy work and more money in the pocket of corrupt officials.

Now it may buy influence from the goverment, but as I mentioned, governments are fickle things and power changes hands frequently.

All the same, I don't think this is irrational behavior from China -- they need to win friends and influence people.

> And when did a Blue Water Navy become cheap?

You'd have to compare the payback period for investing in slum upgrades in Indonesia vs investing in one's own Navy. In many cases it's never vs some intangible number of years.

Re: Soviet Collapse Echoes in China’s Belt and Road

#107

Post by jabl »

duxup wrote: post #38

>In the 1950s, the Soviet economy grew faster than that of any other major country barring Japan. I'd like to read more about what was happening then, was it largely military investment?

Back then, the USSR was largely a rural backwater. After WWII, there was rapid industrialization, mechanization of agriculture etc.

Of course, during the entire cold war the USSR "overspent" on the military compared to the Western economies. But, during the WWII the economy was understandably 100% focused on the war. So even if the kept "overspending" on the military after the war, there was still a lot of industrial capacity left over that could be used for rebuilding and industrialization.

Re: Soviet Collapse Echoes in China’s Belt and Road

#108

Post by dang »

slimed wrote: post #77
Barrin92 wrote: post #56

Earlier quoted context omitted.

I wasn't trying to create any definite story, I'm just saying that it is easy to make a historical analogy depending on what you wantto take away from it. China is not the Soviet Union any more than it is the United States. Doing away with the belt and road initiative by painting it as a Soviet vanity project seems too simple, the country is communist only in name. For me, this narrative seems to be very typical of o…

Sri Lanka is off the coast of India. Your lack of attention to detail does not give one confidence in your argument.

Please don't be rude, even if someone got a detail wrong.

https://news.ycombinator.com/newsguidelines.html

Re: Soviet Collapse Echoes in China’s Belt and Road

#109

Post by consumer451 »

doombolt wrote: post #105
consumer451 wrote: post #101

Earlier quoted context omitted.

That may be true, but it does not invalidate the idea that resources were drained from the satellite nations. How the USSR chose to spend those resources seems to have been to invest in the military and expansion of the empire while ordinary Russian citizens were left to "eat grass."

No, it does. Manufactured goods are not "resources". Those are made for selling, and in modern world markets for goods are considered more of a gift than goods themselves. Are they not? Does USA drain resources from China?

With all due respect, the comparison between the relations of USA/China and Russia/Poland for example does pass the sniff test. The USA did not appoint the Chinese government, the USA does not have its military across China. USSR/satellite state relationships were nothing like a normal economic relationship. They were more like colonial era relations such as England/India prior to Indian independence.

Re: Soviet Collapse Echoes in China’s Belt and Road

#110

Post by trhway »

While the collapse was unavoidable, Soviet Union collapsed when it collapsed, ie. in the 198x instead of say 10 years later or 10 years earlier, because of confluence of 2 factors - cold weather of 198x resulting in bad harvests and low price of oil which didn't allow for enough import to cover the food shortage. Food is the key in support [or lack of it] of a regime by its populace. We have just again observed the same thing of food issues leading to great political upheaval - Arab Spring. Wrt. China - so far there is no food (or any other basic quality of life) issues on the horizon.
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