China’s Decline Hits Positive Feedback Territory

Chinese economic growth continues to decline and it is feared China might even suffer a major recession because of the continued economic problems.

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Positive Feedback Decline in China?

Slower growth in China means slower growth for the rest of the world…. with the headwinds from cooling global growth China’s economy is likely to weaken further before growth stabilises in the second half of the year.” __

You see the cyclic nature of China’s predicament: A slowing economy in China causes a slowing of economies in the rest of the world. At the same time, a cooling of the global economy is likely to further weaken China’s economy. A simple, straightforward positive feedback cycle of decline.

China seems to think it can wait for good growth numbers to return, like the last time. But this strategy won’t work this time…

To stimulate the economy, Beijing is cutting banks’ reserve requirement ratios and launching infrastructure initiatives. Neither is likely to revive growth. Chinese debt, unofficially 300 per cent of GDP, is too high for any debt-led growth policy to be effective. Currently, infrastructure spending is around one-fifth of GDP. It is hard to see how a few projects can move the needle. It appears the government’s goal is stability, especially in the financial system and the labour market, not growth. As the property market tips over, loan repayments become more sporadic. The goal of the monetary policy is probably to keep lending institutions liquid. This policy could be undermined only by massive capital flight. ___

Since the 2008 global economic meltdown, China’s economy is increasingly built upon bubbles — bubbles upon bubbles. There is not much that China can do to extricate itself from this predicament, and the path to war seems to be laid out more clearly with the passing days.

China’s Most Dangerous Misperception

Chinese emperors claimed they had the Mandate of Heaven over tianxia, or “All Under Heaven,” as they believed they were, in the words of Fei-Ling Wang of Georgia Tech, “predestined and compelled to order and rule the entire world that is known and reachable, in reality or in pretension.” As acclaimed journalist Howard French writes in Everything Under the Heavens, “One can argue that there has never been a more universal conception of rule.”

Unfortunately, the current Chinese leader harbors ambitions of imposing the tianxia model on others. As Charles Horner of the Hudson Institute told me, “The Communist Party of China remains committed to ordering the People’s Republic of China as a one-party dictatorship, and that is perforce its starting point for thinking about ordering the world.” In other words, a dictatorial state naturally thinks about the world in dictatorial terms. Tianxia is by its nature a top-down, dictatorial system.

Xi Jinping has employed tianxia language for more than a decade, but recently his references have become unmistakable. “The Chinese have always held that the world is united and all under heaven are one family,” he declared in his 2017 New Year’s Message. He recycled tianxia themes in his 2018 New Year’s message and hinted at them in his most recent one as well.

… The laser attack in the Horn of Africa, far from any Chinese boundaries, highlights Beijing’s unstated position that the U.S. military has no right to operate anywhere and that China is free to do whatever it wants anyplace it chooses. And let us understand the severity of the Chinese act: an attempt to blind pilots is akin to an attempt to bring down their planes and an attempt to bring down planes is an assertion China has the right to kill.

China has been called a “trivial state,” one which seeks nothing more than “perpetuation of the regime itself and the protection of the county’s territorial integrity.” This view fundamentally underestimates the nature of the Chinese challenge. China, under Xi Jinping, has become a revolutionary regime that seeks not only to dominate others but also take away their sovereignty.

Xi at this moment cannot compel others to accept his audacious vision of a China-centric world, but he has put the world on notice. __

The ruling Communist Party cannot placate its people with stagnant non-growth. Popular demonstrations against local and regional governments take place regularly, and as conditions deteriorate in China they will become more unruly. Eventually the running dog imperialists of communist China will be forced to war by the threat of popular overthrow and breakaway fiefdoms.

It is easy for those of limited perception and diminutive intellect to be persuaded by propaganda of the “Chinese supremacy” variety. Unfortunately for China, its foundations are “bubbles all the way down.” The backward nation can only hope to challenge the more advanced world by using theft of intellectual property and by copying what others have devised.

When war comes, the more advanced nations of Taiwan, Korea, and Japan will have several tricks to pull out of the hats which China had failed to see in time. As long as China does not resort to nuclear war, its damages should be limited — and easily repaired under a less expansionist regime.

Perhaps then the way will be paved for the rapid recovery and advancement of a free Chinese people.

More: Chinese slavery economy is booming, as is Russia’s

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3 Responses to China’s Decline Hits Positive Feedback Territory

  1. Matt Musson says:

    China never got back to pre 2008 growth levels. But the Party will go all in to stimulate growth until the Chinese ecomony fractures in a High Velocity Crash. It will be ugly. And it is inevitable.

  2. Gavin Longmuir says:

    “As long as China does not resort to nuclear war, its damages should be limited”

    Didn’t Mao make some comment once along the lines that if China lost half its population in a nuclear war, it would still have half a billion people. And now that China is the Workshop of the World, their ability to recover from a nuclear exchange should not be under-estimated.

    The bigger problem may be that if China decides to get aggressive anywhere in the world, even the US and Russia would quickly find themselves having to choose the least unacceptable option between backing down or going nuclear.

    • improbus says:

      Making China’s access to oil intermittent (oh no, CIA pirates!) would do a lot of damage and it would require no ship to ship confrontations between the US and China. Xi will be lucky to keep China together.

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