Mass produced cheap shit can find a market.
China’s rebound has been disappointing so far.
Meanwhile preparations under way:
https://www.axios.com/newsletters/axios-world-51bc16a7-41d0-4304-851d-bbc66185593c.html
Fed Rate hiked another 25 points after bank turmoil
US continues to suppress demand to inflict heavy damage on Chinese economy - it’s definitely working, but who will back down first before breaking?
As with other rate hikes, the Allied Nations will follow suit as Force Multipliers to maximize economic damage in China.
But the question is, how will the equation work as more countries switch to Yuan…too little too late?
https://edition.cnn.com/2023/05/16/asia/quad-canceled-biden-visit-australia-intl-hnk/index.html
Notable – Quad Summit cancelled.
https://abcnews.go.com/US/wireStory/china-ready-smash-taiwan-rule-us-prepares-major-99358187
“At present and in the future, local conflicts and turmoil are frequent, global problems are intensifying, and the world has entered a new period of turmoil and change,” Wang wrote.
“Various ‘black swan’ and ‘gray rhinoceros’ events may occur at any time, especially with the containing, encircling, decoupling, suppressing, and military threats of some Western nations,” he said.
Is the Chinese annexation of Russia complete? Putin’s role has dramatically diminished to the levels of a Kim Kong Un type puppet dictator as government and military guidance at the highest levels has transferred over from Moscow to Beijing.
Allegedly there was a tense US-China military encounter near Hong Kong the day before the Jan 6 riots in DC.
China and the US became locked in an intense military confrontation as close as 150km from Hong Kong in early 2021, prompting the US to destroy its own floating sonars to prevent them from falling into Beijing’s hands, it is revealed for the first time.
G7 Meeting to take place in Hiroshima, Japan (symbolic!) to discuss dire China relations and how to deal with an increasingly belligerent China.
Mentioned further up the thread - the US and China have been in an economic game of limbo to see who can go lower without completely breaking.
China cut off supplies then reopened with constrained supply chain with Covid, so the U.S. reduced demand even more. The tit for tat continued with progressively extreme measures on each side.
In the face of decoupling, the US which has successfully wielded inflation, and inflationary measures such as rate hikes to suppress global demand on Chinese made goods is now looking at a golden opportunity to hit China with a potential knockout blow.
A US Debt Default.
A US Debt Default could be the non-military confrontation Retaliation that they have been looking for. The stage appears to be set to disguise the US strategy to counter China as merely some domestic political infighting between the Democrats and Republicans. But make no mistake - this is about China.
debt default projections suggest a ~45% drop in the stock market.
I would say, if the US strategy is to counter China and avoid direct military conflict - a U.S. Debt Default could be a powerful tool to bring China to its knees over the next 2 years.
The only question is if the US is willing to endure this…
It’s important to note that China was willing to endure unleashing a virus on itself yo counter the U.S. Trade War… so there is a definitely a chance the US is considering this retaliatory action.
China places restrictions on some Micron chip products in escalating Trade War with the US
US warns China again…
Biden stressed that “We’re not looking to decouple from China, we’re looking to de-risk and diversify." Biden said that G7 leaders agreed that this would be achieved by diversifying supply chains, joining forces in resisting economic coercion by Beijing, and protecting a “narrow set of advanced technologies” vital for national security.
Biden then said, “And there is clear understanding among most of our allies that, in fact, if China were to act unilaterally, there would be a response.” However, he stressed that he does not believe that a conflict is inevitable between China and “the United States and the West and/or Japan and Korea and the Quad.”
US-China trade talks after G7 vows to “de-risk”
China’s factory production hits lowest level since the end of Zero-Covid
A sign that US strategy to reduce demand on Chinese made goods is working. The overall strategy entails suppressing consumer spending on China made goods through inflationary pressures in the US, and force-multiplied by Allied nations mirroring US policies such as Fed rate hikes.
also notable progression in how the trade relationship is being described:
2018: “Trade War”
2020: “Decoupling”
2023: “De-Risking”
and on the business side of things - tech entrepreneurs seek to “De-China”
1 Like
Beijing has long been trying to remedy its vulnerable food and energy imports. They need a bulletproof supply chain if they intend to invade Taiwan or other Asian countries.
Surviving an embargo will be challenging. The West is uncertain about weaponizing hunger against the CCP, so an early sanction/embargo would likely be on Energy resources of which the Allied countries would be able to intercept far from China.
Meanwhile Russia’s 2nd pipeline to China through Mongolia has yet to be developed.
At the moment the Allied Nations are sticking with an “economic embargo” in the sense that the consumption of China-made goods is being significantly suppressed, straining China’s export driven economy and leading to very high unemployment & stifled post-lockdown recovery.
Xi tells national security team to “prepare for worst case scenarios”.
Xi said the “complexity and difficulty of the national security issues we now face have increased significantly.”
China must “adhere to bottom-line thinking and worst-case scenario thinking, and get ready to undergo the major tests of high winds and rough waves, and even perilous, storm seas,” he said.
While this has been happening, in parallel there are rumors that China is trying to backfill its trade losses by converting production of consumer goods to military and medical goods. It is notable that China has sought to convert Ferries and Shipping Containers for military purposes, and since 2020 has shut off transponders on more than half of its shipping fleet.
Maintaining Permanent Normal Trade Relations (PNTR) with China under these circumstances is very high risk.
Recent Events:
- Chinese fighter jet cuts in front of US Airforce Plane over the Taiwan Strait
- Chinese warship cuts in front of US warship in the Taiwan Strait
Echoes of 2001 Hainan Incident in which a Chinese fighter jet crashed into USAF anti-sub plane
Potential meeting between US and China leaders…
China wants the Taiwan Strait and Taiwan 100% for itself – this is a redline for the West. Meanwhile an independent Taiwan is a redline for China. We are watching a masterclass in diplomacy unfold in the face of nuclear war – with the US particularly doing everything possible to avoid war with China, while simultaneously protecting against an invasion of Taiwan. Furthermore the US has signed new Trade agreements with Taiwan.
Corporate America is coming to terms with the gravity of the situation - staring into the abyss of what lies ahead with CCP controlled China marching down a very dangerous path which will certainly lead to conflict and sever economic fallout for everyone.
US strategy of sustained inflationary measures in the west, along with Allies as force multipliers, continues to drive down demand on Chinese goods.
China’s economy is traditionally an export driven economy, so these types of measures are effectively applying embargo-like pressure on the Chinese Communist leadership.
Exports fell 7.5% in May from a year ago, far worse than the 0.4% decline predicted by a Reuters poll.
Imports for May dropped by 4.5% from a year ago — less than the 8% plunge forecast by Reuters.
China won’t be able depend on trade to boost its economy for “another six months, for sure,” he said, noting a drag from lackluster U.S. demand, where inflation — and interest rates — remain high.
“This points to subdued global demand for Chinese goods,”
Let’s see who breaks first under these conditions.
Gates and Blinken to meet with Xi this week…
Fed Rate Hike paused…for now. Any positivity will probably be short lived unless we see meaningful changes from China.
https://edition.cnn.com/2023/06/12/business/yellen-treasury-testimony/index.html
“While we surely have concerns that need to be addressed, decoupling would be a big mistake,” Yellen said in her testimony before the House Financial Services Committee on Tuesday. Americans “benefit greatly” from buying goods that are cheaper to produce in China, she added. China equally benefits from US exports that also bolster the US economy.
That’s why, she stressed, it would be “disastrous” to cease trading with China. “De-risk? Yes. Decouple? Absolutely not,” Yellen said, echoing the joint statement leaders from the Group of Seven (G7) made at last month’s summit in Japan.
Missouri Republican Rep. Ann Wagner criticized Yellen’s approach.
“I think it’s appropriate, and in fact, essential, that we decouple from Chinese industries and entities that are actively participating in unthinkable human rights abuses,” Yellen responded saying there are sanctions in place that prevent Americans from doing business with any entities involved in China’s alleged human rights violations.
Blinken visits China to stabilize relations.
One of the main requests, to re-establish Military communications, has been declined — something China has done so for the past dozen Military to Military calls over the last year or so. Not a good sign.
Chinese media indicates meeting was merely a courtesy.
Meanwhile - The US is set to release information relating to the Wuhan Lab Leak this week as mandated by congress.
It’s possible that Blinken went to Beijing with critical information about events at the Wuhan Lab.
Nevertheless, Blinken went out again to reiterate that the U.S. does not support a Taiwan Independence - which on the face might seem pro China but is still consistent with messaging. The US of course opposes any unilateral change of the status quo, for example a Chinese invasion.
One thing is certain, we cannot ignore China’s aggression, expansion, and massive military & nuclear weapons buildup. So regardless of the meeting, reduced tensions in the media hold no weight over what is actually happening.
China is in a difficult position this summer as it waits for exports to drive the economy late in the year - in the meantime they may need to apply Economic Stimulus.
For a country that is still up and coming the current youth unemployment rate is really awful. It will be interesting to see how they try and fix it.
Cannon fodder. Mao did it.
Possible.
For the unemployed, military might be their future in China.
For empty factories, production of military equipment could also help the Chinese economy.
We saw in the rest of the world that trillions in stimulus merely provide a 1 year buffer before additional inflationary policies need to kick in. The stimulus might encourage businesses to hire, but they will only lose them again in 12 months. So China knows the stimulus is incredibly short solution with a lot of problems on the back end. If China doesn’t care what lies beyond that, then they might unload stimulus and then expect a military draft on the back end to snap up the unemployed (China refreshed Conscription Law for something like this). So in essence, it’s a problem China is deciding either to face it now, or face it 1 or 2 years down the road — and from the looks of things China would be smart to buy themselves more time if they expect to be ready for conflict or at least more success in their “Dual Circulation Economy”
China factory activity drops again…
Also apparently China found 3trillion in hidden reserves?
Latest Trade War Escalation:
West tried to restrict China’s access to advanced Semiconductors, so China is restricting the West’s access to materials needed to make semiconductors.