China’s Marshmallow Days

China Economic Blockbuster

Pay no attention to the man behind the curtain __ The Wizard of Oz (1939)

Despite appreciable slowing of China’s economic growth rates, the Middle Kingdom is riding a glittering wave of apparent wealth. The dragon maintains its ability to shape the destinies of lesser nations with which it interacts, even to the point of taking possession of significant assets of these smaller countries when they default on “honey loans” meant for infrastructure development.

Last year, with more than $1 billion in debt to China, Sri Lanka handed over a port to companies owned by the Chinese government. Now Djibouti, home to the US military’s main base in Africa, looks about to cede control of another key port to a Beijing-linked company…

Some call this “debt-trap diplomacy“: Offer the honey of cheap infrastructure loans, with the sting of default coming if smaller economies can’t generate enough free cash to pay their interest down. In Sri Lanka, acrimony remains around Hambatota and projects like “the world’s emptiest airport.”

… The Center for Global Development, a non-profit research organization, analyzed debt to China that will be incurred by nations participating in the current Belt and Road investment plan. Eight nations will find themselves vulnerable to above-average debt: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan. __ China Debt Trap

For smaller and weaker nations, it is a dangerous thing to default on a debt to China. As we have seen in the South China Seas, the Chinese Communist Party is not at all reluctant to claim foreign territories for itself, and then to move immediately to militarise such territories.

Behind the banner of its “Belt and Road” investment plan, China appears to be embarking upon a grand plan of “marshmallow” imperialism. Calling to mind the child psychology experiments where children are offered one marshmallow now, or two marshmallows if they can wait a specified period of time, the third world recipients of Chinese enticement loans seem to want their one marshmallow now — and damn the long term costs to themselves and their progeny.

China Debt Inside and Out

China has pushed out $38 trillion in new debt (primarily to its corporations) that has (and still is), built massive new debt fueled capacity for a collapsing domestic and anemically growing global consumer base…what could go wrong? And now that the consumer base is shrinking, the debt issuance and resultant further build out in new capacity, apartment blocks, shopping malls, etc. etc. is likely set to go into a final mal-investment overdrive. __ https://econimica.blogspot.ch/2018/03/chinas-impending-middle-class-boom-more.html

China’s debt has skyrocketed since the global deflationary crisis of 2007-2009. A collapse of foreign investment and China’s export markets resulted in the need for China’s government to build future GDP growth upon internal credit-based investments — including massive infrastructure buildups. Such an addiction to debt will be harder for China to break than an addiction to heroin would be to break for the looming number of opiate users in China.

More on the China Bubble

Is China Following Japan’s Tragic History?

China is experiencing the exponential growth of a credit/debt bubble which will have unpredictable consequences. But even more consequential than China’s internal debt bubble is the debt bubble that China is exporting to the rest of the world, via its “Belt and Road” initiative and by other means.

When China “takes over” the territory of a formerly sovereign power — whether via debt foreclosure or via other means of persuasion –> intimidation –> coercion — the dragon carries along the threat of military occupation. A long “island chain” of military occupied territories from the South China Sea to Sri Lanka to Greece to Venezuela and Panama would project an impression of global power to many observers.

Similarly, Japan’s Asian and Pacific conquests prior to its conflict with the US in the 1940s, appeared to be vast and irreversible. Australia was almost certain to be next under the Japanese sword, and then India.

What does this have to do with China? China achieved its wealth following “the Japanese model.” It is rapidly building its military strength using western technologies — stolen, bought, pirated, and copied, much like Japan did. It is extending its regional reach via both economic and military imperialism — based upon an ethnic Han Chinese nationalism, in imitation of the Nipponese nationalism used by the Japanese militarists of the past. China — like Japan before it — seems reluctant to threaten Russia outright, although ultimately China will need Russian resources. Whether Chinese bluster in general is aimed toward actual warfare or merely the threat of war to achieve its longer term ends, the result will be the same.

The events that forced Japan to relinquish its historical conquests and dreams of domination were different in many ways than the events which will ultimately force China to once again back away from painful engagement with the outside world. No matter how overextended China’s outside territories and logistical chains become, the greatest weaknesses for China have always been internal. And so they remain.

China will not be overrun by low IQ immigrants — as Germany and Sweden seem determined to be. China’s rot is built in, displayed in its bloody harvest of human organs from political prisoners, its toxic land-air-water-food-medicines-harbours, its massive corruption and misallocation of resources, a fatal lack of openness and equal opportunity, and the core of greed and deceit that drives government at all levels. These are all ticking time bombs, as displayed in an ongoing capital flight, brain drain, and a general attitude of “getting out while the getting is good,” among those with the opportunity to do so.

Internal Pressures Will Drive China’s Cataclysms

China is experiencing an apparent golden age, with daily announcements of grand achievements “any day now” by the CCP military, by China’s scientists, by the space corps, by the grand “Belt and Road” initiative, and by the unstoppable grand expansion of Chinese influence and domination worldwide. Behind the curtain, desperate manipulation is called for, to maintain outward appearances of inevitable progress.

In other words, China’s future is “baked in” by the characters of CCP leadership and by the stratospheric expectations of the Chinese people themselves — constantly driven to greater heights by government propaganda. But not everyone in China is getting with the program, and that will be an ever growing problem for the master class.

Interesting times, mister Xi.

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