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China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

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131–140 of 238 posts

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#131
post #92

Earlier quoted context omitted.

> America did it to itself. Corporations outsourced manufacturing to China, because American corporations are independent from the US government and profit-motivated.

If a corporation is HQed in and operated out of America, and diverts the bulk of its profits to American citizens, it is reasonable to say that "America did it to itself". American citizens could have voted with their wallets, and they could have voted at the booths to elect governments that would regulate the flow of American jobs overseas. But they didn't, and so here we are.

I think it's important to draw distinctions as to the entity with authority to make a change.

In the Chinese system, that's the market but always capped by political and CCP decisions, if they deign to care.

In the American system, that's resolutely only the market. The government has some limited second order control (tariffs, industrial policy, national security exclusions), but generally didn't use them against China 1990-2018.

Ergo, the deciders moving manufacturing to China were the CEOs of American companies, optimizing their own production costs.

I'd be curious to see an analysis of the rise of Walmart (and immolation of Sears) and later Target vis-a-vis Chinese manufacturing of consumer goods sold in America. I'd be surprised if the centralization of point-of-sale (vs previous more diverse and independent stores) didn't incentivize bulk, low-cost offshore manufacturing via volume.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#132

Earlier quoted context omitted.

> The smartest thing the west can do from now on is dump fiat currencies, switch to crypto Seriously? WTF?

Radical, but the alternative is to honor all the currency paper China now holds. As someone who had no say over any of this, I don't see why I should play this game if I must join the losing side.

> Radical, but the alternative is to honor all the currency paper China now holds.

As if China is the only country that holds US paper. This sort of idea is what could very well start WWIII.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#133

Earlier quoted context omitted.

Radical, but the alternative is to honor all the currency paper China now holds. As someone who had no say over any of this, I don't see why I should play this game if I must join the losing side.

> Radical, but the alternative is to honor all the currency paper China now holds. As if China is the only country that holds US paper. This sort of idea is what could very well start WWIII.

That's why it's a good idea to live outside any major capital city.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#134

Earlier quoted context omitted.

Zeihan is just showing us the data. Do you have any data to back up any counter argument?

Again, I am not making a counter argument. I am pointing out Zeihan has explicit incentive to show a specific narrative - it's perhaps the single largest and oldest tentpole of his career. Is the data the whole story? Are there mitigating factors? Does it need mitigating factors to begin with? I don't know. I even explicitly mentioned he could be totally right on this specific point. I'm simply stating that there is…

I have a personal bias because I'm from Argentina and I see the world becoming more like my country. Countries printing money like there's no consequences or tomorrow.

Argentina's public debt has been pretty stable and on GDP terms it was quite low. But even then, on low public debt, a country can totally wreck the whole economy.

Because we print pesos, ARS, like there's no tomorrow and then people get surprised when we get inflation and a total wreched economy. Then populists start blaming the usual suspects: IMF, USA, EU, the f weather.

People confuse public debt with private credit. The general idea in Argentina, including Ministers of Finance and Central Bank officials, say that ARS credit is not real debt.

Move forward 20 years and you get Argentina.

Edit In Argentina, private credit ARS bonds are called LEBAC and LELIQ for those who are interested.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#135
post #109
post #97

Earlier quoted context omitted.

You’re saying that building roads and bridges is not beneficial to countries which deeply lack roads and bridges?

Not when they are built by Chinese companies, using Chinese sourced labour and supplies, and then the locals are taxed / billed to use them which many can't afford to begin with. Not to mention the governments now owing that loan money plus interest, none of which really went into the local economy. Not arguing against China, nor infrastructure projects, but B&R initiative is very China-centric, with a lot caveats th…

I love this condescending and infantilising tone of yours, regarding African governments as some gullible, uneducated bunches of toddlers that anyone can just walk in and take advantage of - as if they weren’t perfectly capable of signing their own deals.

Fitting such casual “Africa dumb” and “China evil” sentiments in one nonchalant comment seems like such a weird specialty of this brainwashing and propaganda that we have going on in the West.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#136
post #110
post #101

Earlier quoted context omitted.

Source to the systemic contrary? If GE decides it wants to build widgets in another country, GE does.

Conclusion?

That if one is trying to reverse offshoring of manufacturing, one needs to make it in companies' best economic interests.

Make it more profitable (or at least net neutral) to manufacture onshore or nearshore.

A key start to it would probably be to (a) implement a carbon tax on all goods that enter the US via international maritime trade, according to the footprint of their transportation, (b) use the proceeds exclusively to fund a recapitalization of US merchant shipping [0] (new generation lower emission design construction and operation).

Preferably in cooperation with the EU.

Modernizing the provisions of the Jones Act [1] to support US shipbuilding and flagging for inter-national oceanic trade would be a good start.

Merchant shipping, like energy, is a pillar that a country's economy rests on, and shipyards are dual-use heavy economic assets with direct military implications.

[0] https://en.m.wikipedia.org/wiki/List_of_merchant_navy_capaci...

[1] https://en.m.wikipedia.org/wiki/Merchant_Marine_Act_of_1920

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#137
post #135
post #109

Earlier quoted context omitted.

Not when they are built by Chinese companies, using Chinese sourced labour and supplies, and then the locals are taxed / billed to use them which many can't afford to begin with. Not to mention the governments now owing that loan money plus interest, none of which really went into the local economy. Not arguing against China, nor infrastructure projects, but B&R initiative is very China-centric, with a lot caveats th…

I love this condescending and infantilising tone of yours, regarding African governments as some gullible, uneducated bunches of toddlers that anyone can just walk in and take advantage of - as if they weren’t perfectly capable of signing their own deals. Fitting such casual “Africa dumb” and “China evil” sentiments in one nonchalant comment seems like such a weird specialty of this brainwashing and propaganda that w…

You are the only one saying "Africa Dumb" and "China Evil". How is Africa supposed to maintain and extend roads without the expertise in their local population? Or are you saying they do have this expertise?

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#138
post #97

Earlier quoted context omitted.

> These currency reserves largely represent loans China issued abroad, which have been paid off (or are in the process of being served). I think you missed a crisis in Africa. Those loans can hardly be paid off, the interest rates are too high and the borrowed loans Kuch for infrastructure projects aren't leading to any improvements / revenue. If so, show me which have a net benefit for the country where loans are us…

You’re saying that building roads and bridges is not beneficial to countries which deeply lack roads and bridges?

The book "the undercover economist" talks about this alot, but how the USA and the world bank did it. Essentially US contractors go to a developing country and say: you need to build infrastructure for your economy to grow and so take out a huge loan to do that, and paying back will be easy because of all the resulting growth. But there are two catches, the first is that it will be US companies doing the work (or at least controlling the money), and they will vastly over-estimate the growth and hence the required infra-structure (to maximize profits of course). Country agrees, sometimes knowing full well about how its corrupt but they get a slice so who cares, and boom. You get profits for private USA companies and unpayable debts for the country. Bonus is when the debts default the loan-provider can take ownership of whatever was very valuable in the country be it nationalized industries or natural resources.

The fact that China could or would do the exact same thing in Africa is a no-brainer because of course they are.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#139
post #135
post #109

Earlier quoted context omitted.

Not when they are built by Chinese companies, using Chinese sourced labour and supplies, and then the locals are taxed / billed to use them which many can't afford to begin with. Not to mention the governments now owing that loan money plus interest, none of which really went into the local economy. Not arguing against China, nor infrastructure projects, but B&R initiative is very China-centric, with a lot caveats th…

I love this condescending and infantilising tone of yours, regarding African governments as some gullible, uneducated bunches of toddlers that anyone can just walk in and take advantage of - as if they weren’t perfectly capable of signing their own deals. Fitting such casual “Africa dumb” and “China evil” sentiments in one nonchalant comment seems like such a weird specialty of this brainwashing and propaganda that w…

Nah.

This is just usury and loan sharking on a global scale.

Substitute Southeast Asia for Africa.

China is pretty much providing payday loans and debt trap diplomacy to poorer countries (149+) in order to consolidate power.

This has nothing to do with sophistication but everything to do with greed.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#140

Earlier quoted context omitted.

> They're seeking to upset the global money standard. The disturb the global standard, which happens to benefit the US greatly while hurting the rest of the world (especially the global south). Terrible! > They use (basically) slave labor, While it is true that China has a lot of manual labor and less worker rights than most western states, China isnt the sweatshop it used to be anymore. Nearly every "simple" labor i…

Like, great job, but you completely missed the point of the post by addressing the anecdotes. My point was western media prints uniformly negative stories about them and treats them like an enemy. The stories may be true, or not, or fair, or not. It's immaterial. They represent the battle for the hearts and minds of North America.

What a few words can do :D

Then this shall be taken as a counterpoint to the narratives you pointed to :)

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