Cartoon: Da Bears Talk China Currency Manipulation

Tyler Durden's picture

Who says the xtranormal bubble has popped? Today we present the latest "bearish" cartoon with one particular take on Chinese currency manipulation. While we don't necessarily agree with the argument that Chinese monetary policy is the "single most protectionist policy in the world" as China is merely holding up a mirror to the Fed's own monetary tools, it does provide some entertaining perspectives. On the other hand, the observation that China takes 6,000 jobs for every billion dollars in incremental trade deficit, is spot on.

h/t Dylan Ratigan

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tmosley's picture

China is merely holding up a mirror to the Fed's own monetary tools

I'm glad SOMEONE gets it.

66Sexy's picture

Confucious say, problem is credit. For long time American middle class use credit card and live like upper class. Now, that american middle class is lower class, and need use credit card to live like middle class. Chinese consumer no has credit card.. chinese have real middle class, american have phoney middle class. Soon american will have NO class... and shit-load of not pay debt.

And we buy you McMansion at big discount.

Haywood Jablowme's picture

close but no cigar.

unfortunately there's no "L" in the chinese language...

por ejemple:

"probRem is credit...."



rocker's picture

Agreed. The probrem is not credit.  Credit is the song of bank cartel to keep sheep stupid.

Stupid sheep need to become bear.  Bear no use credit.  Tariffs on Chinese would make bear happy.

Chinese use tariffs on US goods.  Return the favour.

Cheesy Bastard's picture

If you listen closely that is why he says "dumpring'.  Funny.

Edit:  Also, nice Ditka reference in the title.  Playoff time, ya know....

BeeTee's picture

I can't belive you dumb asses have just wated 5 minutes of my time with your banal arguements about chinese phonetics.

The point is that the US is being but-fucked by China and apparently enjoying every bit of it!  You spineless, lazy yanks!!!

More Critical Thinking Wanted's picture


China is merely holding up a mirror to the Fed's own monetary tools [...]

That's a bold faced right-wing lie that has been exposed many times.

China is a booming economy, China is fighting inflation and its hot economy is literally bursting with energy. China's pro-cyclical monetary easing efforts to further weaken the yuan are a predatory, mercantile foreign trade regime that takes advantage of the rest of the world.

The US is fresh out of the deepest recessions in living memory, it is facing deflation and its cooling economy has anything but energy. The US's counter-cyclical efforts to ease monetary policy is not only justified in that light, it also helps the rest of the world: it revives an important trading partner and market. (40% of EU exports go to the US for example.)

Furthermore, to claim that China is 'merely' holding a mirror image to the Fed is not only dumb but also violates basic laws of causality: how can China's 10+ years old weak yuan policy have been a copy of the Fed's 2 years old post-crisis easing policy? :-)

To repeat that right-wing lie you'd have to be blind, deaf or dumb - or all three at once :-)

More Critical Thinking Wanted's picture


Btw., it's pretty telling of the intellectual honesty of right-wing folks that while a number of people junked my post, none of them could think of any arguments to counter it :-)

And nothing but the cricket chirp, as usual ...


TBT or not TBT's picture

Chirp Chirp Chirp:   It is just about fighting deflation (lower prices for everything) then how is we have The Bernank talking openly about bidding up prices of equities?

More Critical Thinking Wanted's picture


Simple: because that's the only policy tool he's got.

The main policy tool a central bank has are the short-term interest rates (the Fed Funds Rate in the case of the US). Once that rate reaches zero (and it has reached that two years ago ...), once we are in the ZIRP region, it becomes very hard for a central bank to do anything to drop the effective short-term rate into negative ranges. Doing that is called "non-conventional easing" - and this is what QE1 and QE2 was and is about.

Good anti-deflation policy is two-pronged: one from monetary authorities (the Fed in the case of the US), one from the fiscal authorities (the US Government).

What the US has in place now might be enough - although some components are a bit weak (like tax cuts for the rich - which are likely to go into savings, i.e. are not stimulative).

Also, an uncomfortable amount of debt has been run up by the republican administration in the boom years of 2003-2007 (while the Clinton administration before that managed to reach an actual budget surplus) so most of the natural reserves that should have been saved up in good years were simply not there by the time the bad years came and the massive crisis hit.

It is no accident that both the Great Depression and the 2008 crisis was preceded by republican presidents with a deregularity 'free market' policy ...

Ironically, it's those that cry the loudest about the deficit (the GOP) are the ones who caused it with two unnecessary wars and with mind-less tax cuts, while expanding government spending  ...


mouser98's picture

by "right-wing" do you mean nationalistic, bible-thumping, warmongering, unborn-baby-saving?  or do you mean people that believe that government intervention in the market is always a bad thing?  and i never junk comments.

More Critical Thinking Wanted's picture

I mostly mean those who repeat GOP talking points here on ZH and who voted for the republican ticket in 2000, 2004 and 2008.

But if you are one of the free market crazies who are pining for the days of Standard Oil monopolies or Enron-induces artificial brownouts in California, you probably have some trouble utilizing your brain properly as well, IMHO.

Every experiment with the concept in the past 100-200 years has shown it that an unfettered free market leads to monopolies - and that monopolies are just as bad as governments when it comes to being control freaks, except that they cost more and cannot be voted out.


akak's picture

At least so-called free market monopolies (which are an oxymoron, despite all your Krugmanesque statist koolaid swilling) cannot forcibly tax their customers under the guise of "saving for their retirement" with blatant Ponzi schemes, raid their homes and throw them in prison for consuming unapproved substances, demand that they surrender their privacy and dignity while traveling, nor march them off to war.

I feel sorry for people such as you, who are captive to such dangerous and destruction delusions.

More Critical Thinking Wanted's picture


LOL, you are really living in a fantasy world! Big companies can do much worse in fact.

They can bribe what is left of the government (police, judiciary), they can pay thugs, they can cut off all your future business prospects and worse ...

Big companies routinely do that here and today in countries where there are weak or authoritarian governments. Check the Cable-gate secret documents about what big pharma does in Africa for example. You should live for a few years in such a country to see it for yourself what such a large-company dominated utopia really looks like in practice ...

What keeps governments from doing that is simply the random noise and a certain degree of checks and balances that come from elections every 2-4 years.

Note that corporations out of control are pretty much equivalent to dictatorships in every practical and theoretical sense of the world. In most dictatorships these days there's also some big establishmet-controlled group of big corporations that dominate most lucrative areas of business. One leads to the other.

You do not have to believe me - just check the structure of countries with weak or nonexistent central governments (Somalia, Afghanistan, etc.) or countries that have outright dictatorships.


Spalding_Smailes's picture

A Reply to my Critics on Local Debt

Victor Shih

Since the publication of my editorial in the Asian Wall Street Journal on local debt, there has been a wave of interest on this issue. Several investment banks have issued reports on local debt, and some of them have disputed my main finding that current local government investment vehicle debt stands at around 11.4 trillion RMB. The World Bank likewise addressed this issue and came up with a much lower estimate on local investment company (LIC) debt. In the discussion below, I outline some reasons why I still adhere to my estimate that existing local investment vehicle debt stands at around 11 trillion RMB. Furthermore, I once again reiterate that local debt is a serious problem which will require decisive actions from the Chinese government. 

Some points people have raised about my estimate of local debt:
1. The Chinese government claims that there is only 6 trillion RMB in local investment vehicle debt.
My response: A. This widely cited figure was produced by a 6/2009 CBRC survey of the situation. The exact methodology is unclear, but informants state that the CBRC extrapolated this amount on the basis of a partial study of a few provinces.
B. Other government agencies have provided conflicting and higher amounts. For example, a MOF research team uncovered "well over 4 trillion" in late 2008 (excellent Credit Swiss research even states that the 4 trillion was a YE 2007 figure).
C. The CBRC finding concerns only bank loans, but total debt should also include bond issuance and accounts payable, which constitute triangular debt.
D. if we sum the gross debt of just the top 50 or so LICs, we quickly arrive at gross debt of over 2 trillion (try adding the gross debt of Guangdong Highway, Guangdong Transportation Group, Chongqing Highway, Beijing Basic Construction, Shanghai Urban Construction and Development Company, Shanghai Pudong Development Co., Tianjin Urban Basic Infrastructure, Binhai Development...etc.), so the remaining 8000 or so entities only owe 4 trillion (on average 500 mln RMB each)?

2. The 11.4 trillion is too high when compared with total bank loans in various categories.
My response: A. First of all, total loans outstanding at the end of 2009 was well over 40 trillion RMB, and I think it is completely reasonable to believe that nearly 1/4 of it was loans to LICs. In fact, I wouldn't be surprised that a higher share of bank loans ended up in LICs. 
B. Some analysts have trouble believing that such a high share of medium and long-term loans ended up in LICs. When we consider how many LICs there are and the vital role they play in the local economic strategy, it is not surprising that likely as much as 3/4 of new medium and long term loans in 2009 ended up in LICs. 
C. Beyond medium and long term loans, many LICs are holding companies with subsidiaries engaged in a wide range of businesses. For example, the LICs run thousands of hotels across China, and loans to these hotels would be classified as loans to the service industry. Thus, in addition to medium and long term loans and loans to infrastructure, it is perfectly reasonable for a sizable share of working capital loans, trust loans, and loans in the "other" category to end up in LICs. Again, gross debt of these entities would also include bond issuance and debt owed to each other.

3. LIC debt can be calculated by subtracting government spending on basic infrastructure from the total infrastructure spending figure. In that light, LIC debt only increased by 2.8 trillion RMB in 2009.
My response:
A. First, as pointed out, LIC are diversified holding companies which do not only engage in infrastructure construction. For example, thousands of subsidiaries of local investment companies engage in real estate development and absorb some share of the real estate loans. The figure generated using the method above, however, may be meaningful one-day when the government decides how much of the existing LIC debt it will seek to take over as part of a bail out. 
B. The calculation above assumes that much of the extrabudgetary revenue from local governments derived from land sales went to infrastructure construction. According to excellent research done by Standard Chartered and UBS on land sales, much of the land sales revenue is spent on compensating original residents, leaving only a minority share for actual investment. Thus, a realistic application of this methodology would lead to something like 3.5 trillion RMB in new loans to LICs, not just 2.8 trillion. 

4. My estimate of 12.7 trillion in future LIC debt is baseless and is way too high for YE 2011.
My response:
A. To be sure, I now think most of this debt will not realize by YE 2011 also. However, it would not be far-fetched to think that most of this debt will be realize by YE 2012. This estimate is not "baseless" as it comes from the hundreds of lines of credit that banks have granted to local governments. As long as banks more or less adhere to these lines of credit, they will lend this amount to local governments at some point in the future.
B. Although the State Council has called for more caution in lending to local investment vehicles, we still see local governments aggressively trying to raise money from the banks. Hubei, for example, has an investment plan worth 12 trillion RMB, and plans on investing 6 trillion RMB between now and 2012 (please see Of the 6 trillion, at least 3 trillion will come from bank loans and other forms of debt. If Hubei is able to realize its ambition, we are already 1/4 of the way toward my 12.7 trillion estimate. Thus, unless the central government harshly restricts overall credit, I think local governments at the provincial and municipal levels will have no trouble borrowing an additional 12.7 trillion by YE 2011 or 2012. 

Beyond critizing my estimate, some investment bank reports also argue that whatever the debt amount, the Chinese government is fully capable of addressing this issue and in heading off a financial crisis. On this point, I mainly agree with my colleagues, but I still don't think the problem is trivial, especially in light that local governments seem determined to take on trillions in additional debt in the coming two years to finance ambitious investment plans. My main worry is that unless Beijing decisively restricts local investment projects, local investment companies will continue to borrow in large quantities in the coming two years. 

Even relatively bullish investment bank report suggests that new non-performing loans in the banks can increase by 2-3 trillion RMB in the next couple of years. To be sure, this is well within the government's ability to handle and likely will not lead to any kind of financial crisis. However, this remains a daunting problem for the government and for current shareholders of China's banking stocks. This will require the China Investment Corporation to inject tens of billions of dollars into banks through Huijin. Additional asset management companies will have to be formed to take over the NPLs. This is a lengthy and difficult process involving numerous ministries and interests, which is expected to generate a great deal of uncertainty. If the expectation indeed is a couple of trillions in NPLs, it deserves careful watching rather than dismissal. 

Spalding_Smailes's picture

Mike Pettis


The new normal

On Wednesday an article in the People’s Daily trumpeted a Merrill Lynch report that said 9% growth was the “new normal” for China.

The Chinese economic growth is forecast to slow to 9.1 percent in 2011, from an estimate of 10.3 percent this year, and the 9 percent growth is expected to be a new norm for China in the post-crisis period, Bank of America Merrill Lynch said in a regional economic outlook report released on Tuesday.

After fluctuations since late 2008, China’s gross domestic product (GDP) growth has stabilized at about 9 percent in both year on year and sequential terms, in comparison with the average 11-percent growth in years before the crisis, said the report.

…From 2012 to 2015, the report forecast the Chinese economy is likely to expand by 9 percent, 8.5 percent, 8 percent and 8 percent, respectively. And for the subsequent five years of 2016- 2020, China’s GDP growth might average at 7 percent.

It is interesting that the consensus is starting to shift downwards, and that 9-10% for the rest of the decade is no longer the default expectation, but I am not sure that even the Merrill Lynch numbers are plausible.  I think too many economists are seriously underestimating how difficult the transition to a new growth model is likely to be.

Still, we are starting to see a shift in expectations.  Perhaps symbolic of that shift is an article in last week’s New York Times by the always-perceptive David Barboza:

For nearly two years, China’s turbocharged economy has raced ahead with the aid of a huge government stimulus program and aggressive lending by state-run banks.  But a growing number of economists now worry that China — the world’s fastest growing economy and a pillar of strength during the global financial crisis — could be stalled next year by soaring inflation, mounting government debt and asset bubbles.

Two credit ratings agencies, Moody’s and Fitch Ratings, say China is still poised for growth, yet they have also recently warned about hidden risks in its banking system. Fitch even hinted at the possibility of another wave of nonperforming loans tied to the property market.

In the late 1990s and early this decade, the Chinese government was forced to bail out and recapitalize these same state-run banks because a soaring number of bad loans had left them nearly insolvent.

Those banks are much stronger now, after a series of record public stock offerings in recent years that have raised billions of dollars from global investors.  But last week, an analyst at the Royal Bank of Scotland advised clients to hedge against the risk that a flood of cash into China, coupled with soaring inflation, could result in a “day of reckoning.”

I already wrote in early November an entry suggesting that we were starting to see some leading Beijing policymakers and advisors warning about a rapid slowdown in growth – the numbers bandied abut were in the 6-7% range.  This is till very much a minority view, but I have almost no doubt that during 2011 all the growth expectations are going to be revised sharply downward.  By the end of next year, I suspect that the consensus will be that for the rest of the decade we should expect growth rates in the 6-7% range for China.

Do I believe these lower numbers?  Not really.  About a year and a half ago I wrote in a Financial Times article that, assuming consumption growth could be maintained at 8-9% a year, Chinese GDP growth would average 5-7% annually over the rest of the decade.

My prediction caused a lot of strong disagreement and accusations of being overly pessimistic, but the truth is I think I was being optimistic.  If GDP growth slows so substantially, it seems to me that consumption growth of 8-9% will be very hard to maintain, so I would argue that we should be prepared for even lower average growth numbers, perhaps in the 3-5% range.  But I do think the consensus next year will migrate down to the 6-7% range, even though next year’s growth should remain high – probably in the 9% range.

Slowing growth?

Will that be a disaster?  Here is where I disagree with Barboza’s article.  He says:

A sharp slowdown in China, which is growing at an annual rate of about 10 percent, would be a serious blow to the global economy since China’s voracious demand for natural resources is helping to prop up growth in Asia and South America, even as the United States and the European Union struggle.

And because China is a major holder of United States Treasury debt and a major destination for American investment in recent years, any slowdown would also hurt American companies.

I am not sure why Chinese holdings of USG bonds suggest that a Chinese slowdown will hurt US companies, but I have already explained why I do not think a sharp slowdown in Chinese growth is necessarily bad for the world.  It will be very bad for commodity exporters – or at least non-food commodity exporters, since I think the demand for food from China will continue strong – but the overall effect on the rest of the world depends on the evolution of China’s trade balance.  A contraction in the surplus creates net demand for the world, and so might even be marginally positive.

This marginally positive outcome won’t be evenly distributed, of course.  Non-food commodity exporters will be badly hurt, while commodity importers and manufacturers will benefit.

I don’t even think such a rapid slowdown in Chinese growth will be bad for China.  Again it depends on how it takes place.  If there is a serious attempt at rebalancing the economy by raising wages, interest rates and the currency, China can manage a much slower GDP growth rate while still maintaining a fairly high growth rate in household income and consumption.  I discussed this in more detail in an entry last moth.

In the spirit of end-of-the-year pieces let me suggest a few things to watch for 2011.  First, although I do not believe inflation is going to be as big a problem as many think (I believe the Chinese financial system has a built-in inflation-stabilization mechanism – see my November 18 entry), if I am wrong and inflation continues to rise, this will create a real problem for monetary policy.

Second, debt levels are worryingly high and are starting to act as a serious constraint on the rebalancing process.  My friend Victor Shih at Northwestern University has done great work in trying to figure out the government balance sheet, and he worries, correctly, in my opinion, that it is becoming increasingly difficult for the PBoC to raise interest rates without creating a great deal of financial distress in government-related entities.  Even the PBoC balance sheet is a real problem.  How can they raise RMB interest rates without running a huge negative carry?

Third, the trade constraints are going to get worse, not better. Ashoka Mody and Franziska Ohnsorge have a very interesting pieceon Vox that suggests that we shouldn’t count too heavily on consumption growth in the developed world to boost global demand.  That means we are going to spend the next few years fighting over anemic demand growth, and we will be apportioning that demand via trade disputes.

Fourth, although GDP growth rates next year will be very high to see off the current leadership, I am pretty sure that by the end of the year there will be much more concern about the rebalancing process and what that will mean for growth rates.  In order to get those high growth rates, I don’t think we need to take the 2011 lending quota too seriously.  Whatever it is, it will be breached.

Happy holidays and have a great 2011.


pods's picture

Whatever the US is going through I can assure you that China is the symptom, and not the probrem.  China is the symptom of a continued devaluation of our currency, and a way to maintain margins.  If it were not for China, the US would have collapsed a long time ago.  Before China, it was Japan.  Before Japan it was women entering the workforce en masse.  All symptoms of a devaluing currency.  When we started to devalue with gusto, a wife had to go into the workforce to maintain the families' standard of living.  Now both parents work and they outsource raising their kids to some $8 an hour "caregiver".

If it were not for China giving us cheap ass lead tainted toys and trinkets, we could not anesthetize our inner pain and just maybe some would have woken up to change the real probrem.

But, just keep pointing at the bad, bad yerow man.  We are running out of brown skinned enemies, and if we cannot find another external threat then we might have to look into the mirror.  

Here is a very prescient quote:

But again, truth be told, if you are looking for the guilty, you need only look into a mirror. 

mouser98's picture

wow!  +1000000 pods

More Critical Thinking Wanted's picture


Indeed, +1000000000 pods for daftness! :-)

Firstly, you did not reply to my arguments, you just brought up another logically-challenged argument.

Does it cause problems for you to identify arguments and to answer them directly?

Secondly, China fixed its currency at an artificial peg against the USD more than 10 years ago. Trying to claim that this is somehow the US's fault and that Obama is to blame is brazen even by right-wing standards :-)


66Sexy's picture

Credit is a form of currency, as debt is money. 'Monetary expansion' occurs when a consumer signs their name to a credit card charge. The consumer gets the goods, the banks get debt money, the retailer gets the credit money and probably puts it in the bank somewhere. This being currency creation, it could be considered by a country not employing a consumer credit system as "manipulation"...

Not to mention, Banks create debt currency and enable (and encouraged) americans to live beyond their means through credit; this is certainly at least part of the problem.

Troy Ounce's picture



Wrong! There is no "r" which is pronounced as an "l"

Remember Chairman Mao's answer to Nixon when asked if there were elections in China?

"Yes", Mao said,"evely molning!"

Haywood Jablowme's picture

ahhh yes, that is collect....

I'm getting colnfused with my nihongo in which case "R" does not exist.  Sumimasen. 


velobabe's picture

Hey would you just blow me† all three of my vibrators were made in china. i am going to stop using them, in protect. now can you help me out, mr blow?

Rodent Freikorps's picture

Why would you need three? Do you have to swap them out due to heat build-up?

Does one have a kick stand?

velobabe's picture

i was thinking the same thing. i have been straddling something my wHOLE life. but now that i found out all my vibrators are made in china by some smuck laughing that americas have to use vibrators to get off. it makes me sick of myself. no need. another way to dumb down americans. i am glad i only started using these kind of tools for 9 months. i use to only use water pressure. my wax is made in china too. chinese must laugh about american's  and brazilan's want to get rid of p hair†

Kayman's picture

Uhh... and those vibrators likely break down at the critical moment (like all other crap made in China). 

And, uhhh.... not to get too personal, but I would take those vibrators to a lab to be certain that your delicate body parts aren't dissolving cancer-inducing chemicals in the "recycled" plastic.


boooyaaaah's picture

So ----- the bears slap down zero hedge

China devalues currency by 50 percent according o the chart --- isn't this like printing money

Uncle Ben is devaluing the US currencey

Which is the same as up valuing the Chinese currency

Which will make our workers more competitive

Sure metals will rise along with everything else

Gold is almost a 2 bagger since it's high in 1980, big deal

After the readjustment in currencies the dollar will again reasert itself --- maybe --- but that can't be decided now.

Debt is the problembo --- and default because of debt that is deflationary -- not inflationary. The fact that cheaper currency will fix current debt to some extent is good but not the game changer

The game changer will be a redirection of who makes buying decisions in the US. Hopefully (for the US) it will go from A to B

From A the Politial elite to B the producers.

From A the banksters (who get gov money first) to B finaciers who finace the producers above

From A politically influential Unions and unsustainable pensions and relative wages. To honest workers and real wealth creators.

From A Political hacks who invent industies out of thin air for example 1) Global Warming 2) Carbon Exchange 3) Gov. Health Care 4) Solar Energy 5) Burning corn for fuel To B any industry that can stand on its own without Political Hack diverted taxpayer dollars

China capitalism will not stand a chance against the reformed America 




putbuyer's picture

The chick bear is starting to look hot. These bears provide better education that the MSM. Too fucked up and funny...

Haywood Jablowme's picture

Haven't these producers ever seen a damn kung-fu movie?  If you're going to use a bear with a foo-man-choo, at least do the damn clip correctly.  The lips and the voice being projected AREN'T supposed to be in sync.  DOH!

Lesson 1:

at least throw in some subtitles!


LooseLee's picture

I take that as an insult. Best Chinese movie ever, "Enter The Dragon", lips were in sych. ha, ha...

tmosley's picture

But not one Fu-manchu!

Well, I think.  It's been a while since I saw it.

Thomas's picture

My favorite line: "especially the left one."

Freddie's picture

The MSM job is to lie to, confuse and brainwash the public.  The AP is owned by the Rockefeller/Rothschilds along with other media.  Saudis have bought into US TV networks heavily including Disney, Time Warner, News Corp (Fox) and has deals with the others.   Keps the public stupid and distracted.

Michael's picture

What happens when the Chinese housing bubble pops? All economic bubbles pop 100% of the time without fail.

I hear China has enough vacant property to house 2/3 of the US population. 64m vacant units.

Hephasteus's picture

They're there to remind you just why the leaders are in charge. Their brilliant use of resources. Who can resist becoming a servant to them. I'd love to have all the job satisfactions that comes from sweating to make entire freaking cities that nobody lives in.

jeffgroove102's picture

Maybe will start exporting some of our homeless problems to china, the same way mexico exports their welfare beneficiaries here, LOL!!

Shameful's picture

If I had to guess, a war.  The CCP will do anything to stay in power, anything.  The Chinese are quite nationalistic and proud, not surprising since their meteoric rise.  So the leadership will either need to find a way to make it whole, which is likely impossible depending on the size of the true malinvestment, or find a scapegoat or a combo.

They could really start saber rattling with Vietnam over sea territory or with Taiwan, or blame the US and sell their dollar assets and try to plug the hole.  I can't be the only one to notice all the military news coming out of China.  People put up with a lot of hardships when at war, especially if there is a quick win.  But then I'm no China expert, someone probably knows them a lot better then me.

Michael's picture

I don't see any reason to go to war. It's only money.

Shameful's picture

Right it's money.

China is built on a promise of economic prosperity.  If the CCP delivers they stay in power, they have a brutal deleveraging and the people lose their savings, then who knows.  But the Chinese do love a good revolt, even when unarmed.  I'm no scholar of Chinese history, but there have been a fair number of peasant uprisings.

Alienated Serf's picture

give it 20 years.  if they don't explode from us exporting inflation, they will significantly augment their military.  they are developing a  serious navy, something they have not had since the ming dynasty limited ship size in the late 1400's.  they are as exceptionalist and nationalist as americans.  

XPolemic's picture

I'm no scholar of Chinese history, but there have been a fair number of peasant uprisings.

Actually remarkably few given their history. Chinese society is clan feudalism in the extreme. Even their wars in early history were mostly smoke, noise and numbers. In China, the powerful are always in power, peasant uprisings barely last a week, and only one has ever succeeded, and that was mostly due to the infinite corruptibility of the Guo Min Tang and the short sided stupidity of the US State Dept.

When the inevitable correction arrives, I think the Chinese will just grumble and push on, like they do in Hong Kong. They don't want to give the ruling party an excuse to go back to Communism, so they will take their losses and look to buying gold in the future.

Given that Communism is a dead political philosophy (even in China), any change of government would be a change in name only. Who do you think has been getting rich during the boom? It ain't the peasants. It's the PLA leadership and the ruling party members. They can create a capitalist republic in a heart beat. Not much difference between a Communist dictatorship and a Capitalist one, as you are about to find out in the good ol' USoA.

Kayman's picture

China pulls Dear Leader's strings, whenever China needs a diversion away from China negative press.

But Taiwan is the easiest. The island is infiltrated with red agents and  the U.S. is not going into a hot war over Chiang Kai-Shek's Formosa. 

There will be lots of American grunting and groaning, but China knows this is the first trump card.

The Chinese have been playing a superb game of chess.  They see the forest.

America has been stumbling on a checker board and has yet to discover Chinese trees, never mind the forest.

Joe Sixpack's picture

Maybe they did that so the Chinese would not come here and buy our McMansions!

Xibalba's picture

HAr! HAr! HAr!

midtowng's picture

The united states had the highest tariffs in the world for a century (circa 1860 - 1960). during that time America created the biggest industrial base in the world and had the highest standard of living.

 But now we must sacrifice everything because protecting American jobs is now unAmerican.

tmosley's picture

Correlation is not causation.  

During that time, federal spending as a % of GDP was 2%.  That has a LOT more to do with it than anything else, as we got a depression shortly after they went over 5% every single time.

Michael's picture

NAFTA passed the Senate 61-38. Senate supporters were 34 Republicans and 27 Democrats. Clinton signed it into law on December 8, 1993.

Clinton is responsible for completely decimating the consumer goods manufacturing sector and the sheeple love him for it. I don't get it.

It is impossible to create sustainable employment without a healthy manufacturing sector.

In addition Clinton did sign the repeal of Glass-Steagall, futher insuring the US economy would be completely destroyed.

Clinton learned well from Cecil Rhodes what had to be done to the proles, for their own good.

Max Hunter's picture

Are you suggesting that our government would pass legislation (or repeal) not in the best interest of the people?

How dare you...