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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

#141

Post by JumpCrisscross »

igravious wrote: post #134
robocat wrote: post #114

Earlier quoted context omitted.

I don't think your example shows that, and the article disagrees with you: "The value of freight between Europe and Yiwu, a much-touted overland rail hub near Shanghai, came to 2.27 billion yuan ($330 million) in the first four months of this year [snip] China’s top four ports alone process about the same value of cargo every three hours." Also see this graph from the article: https://www.bloomberg.com/toaster/v2/cha…

So what? The trade route only just opened up. The numbers started at zero and started only recently, so of course they are small. By how much the trade is going to increase and at what rate is what everyone is arguing about. People underestimate how large Eurasia is along its east-west axis and how underdeveloped it is in parts. I predict the naysayers and doomsayers will be eating their hats. In nominal terms the US…

> The trade route only just opened up

This is about the fundamental capacity constraints and costs of rail versus maritime transport. The former will always be more expensive than the other, and always be further capacity constrained. The only thing that could change that is a quantum leap in several technologies, in which case the current investments become useless.

> “Rail services are considerably cheaper than air and faster than sea”

Where are you getting this quote?

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

#142

Post by [deleted] »

danmaz74 wrote: post #116
sonnyblarney wrote: post #66

Earlier quoted context omitted.

I think both your assertions are not correct. Economists just want 'real' numbers from China, numbers that reflect some kind of reality. That's before any ideology sits in. If there were at least transparency there, we'd all be better off, that said if there were, the 'fudges' necessary to make things worse would be more obviously lies. As far as 2008 - this was a failure of integrity from the bottom to the top: thos…

> Were actual, material numbers to have been objectively published, we wouldn't have had a crisis in 2008, because nobody would have bought bundles of crap, and the market would have needed no correction because it wouldn't have gotten out of hand. This is circular reasoning. The market works on the information that is available at a given time, which includes all the fudging of numbers that salespeople and marketers…

[deleted]

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

#143

Post by [deleted] »

rtpg wrote: post #121
sonnyblarney wrote: post #118

Earlier quoted context omitted.

No, it's not circular logic. Lying to the public, to the government, false reporting is illegal, and against a lot of other controls and regulations that are in place to support a healthy free market. There is a lot of information that does not have to be made public and people can do as they please with it - but this was not the cause of 2008, for the most part.

Maybe a bit tangential, but do you feel if regulatory bodies were given more power to execute on already existing laws and to investigate this kind of fraud, we could prevent 2008-style crises in general?

[deleted]

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

#144

Post by phobosdeimos »

kbart wrote: post #128

Heh, again China 'collapses', such articles keep coming for ~20 years now, yet it's only getting stronger. If I had to bet my money, I would bet that China will outlast any current major power and USA is in much more dangerous position stabbing long time allies in the backs, isolating itself and monkey for a president.

China has been around for what? Three thousand years? Its not going anywhere. Even at its lowest point under Mao it still exerted enough influence to counter the Soviet and US political domination of Asia.

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

#145

Post by sswaner »

sonnyblarney wrote: post #35
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…

The comparison to Soviet Union is problematic but definitely more relevant than US investment scenarios that you highlighted. The US scenario you highlighted would be more comparable to Chinese investment in the last 25 years, no? The clear difference between Soviet Union and China is that China has a growing and robust economy, with a firm grip on the situation whereas the Soviet Union was aching away on so many lie…

Perhaps a better comparison is a slightly older one - the economic consequences of the Russian investment in the Trans-Siberian Railway. The significant [struggling to find a citation with numbers] investment as a percentage of GDP between 1891 and 1916 starved other capital investments that would have yielded greater return in the more populated west. In addition, the infrastructure investment brought the Russian Empire into stronger contact with previously distant empires (China and Japan). By 1914 and the start of World War 1, the railway was valuable in bringing resources from Siberia to the west. But, if that capital had been invested in the western provinces, even improved railway network in Ukraine, Poland and Belorussia, would war outcomes have been different. And, would capital investments more directly visible and related to population centers created a dynamic that would have been less sympathetic to Bolshevik ideology?

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

#146

Post by gspetr »

varjag wrote: post #123
gspetr wrote: post #91

Earlier quoted context omitted.

A not well-researched viewpoint. In USSR since late 20s, a significant portion of workforce was compensated on a "per unit of goods produced" basis, not "per hour worked", which was the standard in contemporary capitalist countries. Slave labor in the post-renaissance era cannot compete with other types of labor. If it could then the South would have fared much better in the US Civil War and everyone and their grandm…

Incorrect. Farmers were closer to slave labour and paid in "work-days", which could be accounted for handouts by administration. Farmers had no freedom of movement outside their farm territories. Life in Soviet villages was largely subsistence based. Slavery for farmers was abolished in 1974 when they were issued domestic passports (the primary ID in USSR) just like townspeople. As for countless prisoners, they were…

A strawman. Farmers alone could never account for the record Soviet rates of economic growth. And neither could they if combined with convicts/POWs.

In late 20s this was the deal:

- Poor peasantry cannot provide wheat due to very poor productivity. They use primitive and crude tools, because by definition they cannot afford anything better and can barely even feed themselves, let alone produce any meaningful surplus that can be exchanged for goods or money.

- Rich peasantry is not incentivized to, since the state has monopoly on pricing and is the only legal buyer.

- It's impossible to offer industrial goods to the peasants in exchange for wheat because all resources are directed toward industrialization to create means of production.

- There are foodstamps in the cities, food becomes more expensive, the workers are discontent.

- The state loses most of it's export revenue because the global price of wheat declines as the Great Depression begins.

- The West refuses to trade with USSR even in exchange for gold.

The entire point of collectivization was to raise workforce productivity in agriculture to free enough people to work in cities and to allow these farms to be able to buy industrial goods.

Forced collectivization mostly stopped in 1932-1933, you could run a farm on your own if you wanted to, but you would have been taxed at a much higher rate than a collective farm.

The other key point is that state monopoly allows for concentration of capital that cannot otherwise be achieved in a dirt poor country. Would an efficient soviet land owner (or a foreign investor) have invested in a tractor factory in 1929?

The answer is: No, because the demand simply did not exist. And even if it would have appeared, it would have been much easier for a land owner to just buy Ford's tractors worth $300-350 each, not invest in a tractor factory.

And even though the West refused to trade, the US engineers played pivotal role in construction of key soviet factories and plants:

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

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

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

#147

Post by phobosdeimos »

seanmcdirmid wrote: post #61
sct202 wrote: post #59

Earlier quoted context omitted.

Yeah, people keep saying China is a house of cards, but they're spending their money on things you can see and use. The train I take to work is 40 years old, and the tracks are over a 100. I'm envious of all the new things they're building with all their 'fake' growth.

> Yeah, people keep saying China is a house of cards No they don't, that is completely a red herring. > I'm envious of all the new things they're building with all their 'fake' growth. We could have HSR also if we were willing to pay for it...if we thought it made sense to our economic growth. And the Chinese have taken out a lot of debt to pay for it, it wasn't free, and the only profitable line ATM is the one betwe…

The US hasn't balanced a budget in decades. You would think that during an economic boom they would at least try. I am quite shocked nobody even seems to care- creditcard culture.

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

#148

Post by yostrovs »

duxup wrote: post #71
yostrovs wrote: post #49

Earlier quoted context omitted.

So much destruction post 1940s coupled with slave labor (local political prisoners and German prisoners of war) leads to roads and steel plants being built quickly. The population though lived on near nothing till the 60s.

Yeah, also I wonder how you compare something purely state run like Russia with something more along market lines in the short term .... they operate so differently. State run can often create a pretty big economic short term bump if they wish... not sure that means much.

Comparisons, however made, turned out to be false because of lack of information. Soviet Union may have had tremendous output of steel, on paper, but nobody had a microwave till the 1990s. The word economy was something else there than what it meant in the West. In the West it relates, though quite imperfectly, to financial wellbeing of the citizenry. In the USSR it meant how many tanks could be built. No one, even in the 1980s owned a car in practical terms. Some had a car but only used it sparingly, like going to countryside on weekends if they could find and afford the gas.

Plus all the numbers coming from inside USSR were inflated or imagined. Steel output was verified by CIA probably through satellite imagery, which turned out to be wildly false because industrial plant efficiency was nowhere near the West's.

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

#149

Post by kahirsch »

User23 wrote: post #98
sonnyblarney wrote: post #93

Earlier quoted context omitted.

It's the same thing as borrowing. US gov sells TBills, those TBills are bought by China. The transaction you described also translates government debt into currency, which China also sits on, so it's a kind of an exchange debt. So the US 'owes' China a gazillion dollars in services and stuff. One way or another.

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…

This is not correct. The government sells treasury securities at auction.[1] Primary dealers are required to participate in all Treasury auctions.

When the Federal Reserve conducts open market operations, it does create reserves out of nothing, but most Treasury securities are not bought by the Fed. The Federal Reserve can buy treasuries directly from the government via non-competitive bids, but generally buys and sells treasuries on the secondary market via primary dealers.

[1] https://www.treasurydirect.gov/indiv/products/prod_auctions_...

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

#150

Post by trocadero »

sonnyblarney wrote: post #93
User23 wrote: post #78

Earlier quoted context omitted.

The US doesn't borrow money from China. The US swaps treasuries for reserves with the Federal Reserve, which then sells those treasuries to primary dealers, who in turn sell them on the open market where anyone including foreign sovereigns like China, can buy them. In the unlikely event that the Federal Reserve failed to sell those instruments, they'd be left on their balance sheet and the interest would be remitted…

It's the same thing as borrowing. US gov sells TBills, those TBills are bought by China. The transaction you described also translates government debt into currency, which China also sits on, so it's a kind of an exchange debt. So the US 'owes' China a gazillion dollars in services and stuff. One way or another.

The US owes China gazillion dollars. Not a gazillion dollars in services and stuff. That's a huge difference because at any point the US can create a gazillion dollars for virtually no effort.
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