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China's Leadership: Brilliant Or Clueless?
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
What worked in the post-global financial meltdown era of 2008-2014 will not work the same magic in the next seven years.
I am often amused by the Western media's readiness to attribute godlike powers of long-term planning and Sun-Tzu-like strategic brilliance to China's leadership. A well-known anecdote illustrates the point.
Zhou Enlai, Premier of China in the Mao era, who when asked by Henry Kissinger about the French Revolution, is reputed to have replied, "It's too early to say."
This is generally taken to express the Chinese Long View, i.e. that the events of 1789 are still playing out.
But accounts of those present discount this interpretation. Zhou understood Kissinger's query as being about the 1968 general strike in France. That social revolution was still actively in play in the early 1970s when Zhou and Kissinger were meeting, so the time frame was definitely present-day, not the 18th century.
China's dramatic rise since the early 1980s, when Deng Xiaoping's reforms occurred, has been nothing short of phenomenal. This remarkable success has to be attributed in some measure to the leadership's policies and decisions of the past three decades.
This economic success is the foundation of those who see China's leadership as brilliant.
But the policies and decisions that worked so well in the boost phase of growth--what we might call the era of low-hanging fruit--do not necessarily work in the next phase, where growth has matured and all the costs that were ignored in the boost phase must now be addressed and paid.
If we look at the problems in China's economy, environment and foreign policy, it seems the leadership is making it up as they go along, with the one overriding goal being to maintain the domestic political control of the Communist Party.
On the economic front, China's leadership has actively pursued policies that expanded the shadow banking system and conventional banking system into a $28 trillion debt bubble. This explosive expansion of credit has fueled a real estate bubble of monumental proportions, and a $10 trillion stock market bubble that is now bursting (as all bubbles eventually do, despite claims that "this time it's different").
Rather than being brilliant, this is a disaster, as bubbles don't dissipate without profound systemic consequences.
rather than deal with the crumbling of the real estate bubble, China's leaders have inflated a stock bubble that promises to bankrupt the tens of millions of households that placed bets in the casino with borrowed money (margin accounts).
On the foreign policy front, China has accomplished the near-impossible, i.e. driving all its neighbors into a united front, as Vietnam, the Philippines, Korea and Japan are all being forced by Chinese belligerence and over-reaching territorial claims to set aside their differences and strengthen ties with the U.S.
Were someone to craft a foreign policy designed to unite all of China's potential enemies into a powerful alliance, this would be the top choice.
The Chinese leadership is acting for all the world as if it moves from strength to strength, when the reality is the opposite: the leadership moves from one catastrophically ill-planned misadventure to the next.
It is easy to predict the unraveling of the real estate and stock market bubbles and the subsequent collapse of China's multi-trillion dollar shadow banking system. Having united all its potential enemies into one camp, China has undone decades of careful diplomacy and boxed itself into a diplomatic corner. Now that it has publicly issued extravagant territorial claims, China cannot back down without losing face; but if it continues to push its claims, it further alienates potential allies and pushes them to strengthen ties with the U.S. and other nations threatened by China's bellicose claims.
In the Great Game, one should never risk one's position before one has the means to defend that position. China is aggressively pursuing territorial claims that is cannot defend without isolating itself--a policy that would doom its export-and-resource dependent economy.
There are few if any historical precedents for China's leaders to follow. the boost phase of plucking low-hanging fruit is the easy part, the fun part, the exciting part.
Dealing with the aftermath of burst credit/asset bubbles, environmental destruction, corruption, wealth inequality, global recession and China's aggressive claim to territory in the South China Sea is the hard part, the not-fun part, the part rife with the potential for catastrophic errors in policy and judgment.
What worked in the post-global financial meltdown era of 2008-2014 (i.e. inflating a $15 trillion credit bubble) will not work the same magic in the next seven years, but there is little evidence that China's leadership (or indeed, the leadership of the U.S. Japan and the European Union) have a Plan B that will replace strategies that are yielding diminishing returns and raising the risks of a systemic failure.
Brilliant or clueless? As Zhou observed, it's too early to tell.
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<---Brirriant!
<---Cruress!
I am going to make a "lightly educated" guess that China's leadership is no better than our own (well maybe a little better than ZerObama). Lightly educated because I have only visited once as a tourist, but we do buy from them, and I read...
Their country is a filthy polluted mess. Their debt is out the Wa Zoo. They have severe demographic problems (try finding a wife if you are around 30 years old there). Maybe their leadership is not clueless, but almost all near the top are looking out for No. 1.
EDIT:
Ha ha Stares straight...
Clueless doesn't begin to describe it. As Einstein said, insanity is trying the same thing over and over and expecting to get a different result. China is trying the same thing everyone else in the world has been doing, and it hasn't worked anywhere else either.
Clearly China is clueless. The reason is that if they were brilliant they would have called in Golman Sachs to set policy for them.
"China's Leadership: Brilliant Or Clueless?"
Yes. They are brilliant and clueless, depending on the subject.
+100
Because this is the case, the reason behind it is simple:
For the masses there is the Marxism, for the elite there is the Confucianism. Now try hammer out some sort of reasonable policy from these incompatible ideologies. It is near impossible.
And you need take into the account the Marxism operates with incoherent terminology which means it is using accounting terminology without real life root like "surplus labor", "surplus value" etc. WTF are these?
The Chinese were convinced that if they implemented Keynesian policies into their system they could grow exponentially and use the policies to control markets on the Q.T.
At least a few at the top would grow exponentially. Think about it, Keynesian fiscal policy fits well into a Communist/central control mind set.
China. sell the T-bills, buy gold, let the fucking curency float. Let the banks fail. Fill the ghost cities to the highest bidder. Wait 6 to 18 months. Shit will get better.
He didn't mention Russia once in the entire article. Amazing.
"Leadership: Brilliant?" Oui mon capitaine. I am not sure if the west could be any worse served than it is right now...
Chi-Com authoirtah to da mooon!
Clueless - command economies work amazingly well to pay your crony supporters handsomely, until something fucks up.
They haven't quite got to the "bail out your mates" malarkey as seen in the US, but it's only a matter of time.
Let me help you with your problem Charles. Hint... it's not the former... starts with a "C"... and they don't have a friggin....
You're welcome.
In all earnestness, the Chinese copied and pasted their way to the top. We all know the story. Slave labor and a printing press. Copy the Asian Tigers export model. Ruthless mercantilism. Badabing badaboom... easy money. On the other end we have our dumbfuck political leadership that allows these assclowns to rack up 300 billion+ annual trade surplusses over us.
Is it really rocket science?
"An oppressive government is more to be feared than a man-eating tiger."
- Confucius
I didn't think so. But after 5 years I am absolutely convinced they are clueless.
This world is fucked up enough with the 320 million CONsumers we have in this country. Imagine what it would be like with another 1.4 billion Cheeto eating water bottle drinking Chinese CONsumers into the mix. Once we get India on line we will need Africa for a fucking landfill.
We don't have the resources to expand the consumer economy any more than it is now. Thus why the economy stalled out.
I don't know about that either. Under the current initiative-stifling Euro-rule, you are probably correct-- but that is an unnatural and alien force that has been locked around American necks. Throw off the statist collar, roll up the sleeves, and fuck the world til it whimpers for mercy.
It can be done. But it won't.
We gotz cedick. Lots and lotzs credick.
Until we don't.
I don't know if I'd use the word clueless. Instead, I think a country that has run every single decision since 1949 through the funnel of a massive single-party bureaucracy is hopelessly corrupt. Even the most well-intentioned or wisest plans falter as the multifarious layers of officialdom peel a little bit off for themselves and their friends, redirects the project over to a company in which they hold an interest, etcetera.
What results is an entire nation that is directed towards first feeding the parasite attached to its neck and then hoping there's a little something left over for the nation itself.
Not particularly different from the mad, oppressive reign of the czars in Russia. Or from the Chicago Reforms desired by the All Highest and the corrupt crone who wishes to sit on his throne afterwards. The advantage we have over the Chinese is that our rulers WISH they were facing angry citizens armed with pitchforks and torches, or properly registered British butter knives rather than American Colts and Winchesters with plenty of ammunition at hand.
I like your neck feeding parasite analogy. I think of government as much like a tapeworm, myself.
Jim Willie thinks this is a reason to bust VW, to drop the price on platinum.
Platinum poised for worst quarter in 7 years on VW scandalhttp://www.cnbc.com/2015/09/29/platinum-poised-for-worst-quarter-in-7-ye...
SG! Yeah, I know, I feel the Pt pain...!
Please share with us the relative abundance of Precious Metals, their marginal production costs, and which countries own what percentage of its ores. That will give us a more meaningful picture of the PM landscape.
These "prices" that some people speak of, are only in terms of the USD. And they will change (be re-pegged/re-indexed) when a certain group of countries decouple from the USD -- and they do so in concert, for maximum effect.
If my analysis is correct, this is already happening, insofar PM prices are rising in most G20 world currencies, except the USD. In the BRICS and in Europe "It's The Final Countdown". When the biggest of players coordinate their FX activities, and swap UST's for USD's and then for bullion deliveries, the premeditated avalanche begins.
Got Cash? Got Precious? Got Real Assets? Having all three lets you hedge and endure better, and sleep better. (I seldom sleep, but when I do, I sometimes have nightmares about someone named Mr. Smith).
China's Leadership: Brilliant Or Clueless? Neither. They simply take orders from agents (front men) of The Great Red Dragon (Serpent, Snakes In Suits, whatever), just like Russia, United States and other countries.
I remember when the Japanese were all geniuses... and I also recall when people thought Harvard MBAs were smart.
Regarding the regional geopolitics, none of those neighbours of China has ever been, or can be, a friend of China's anyway.
Japan and Korea are both US protectorates, Japan's WWII history with China is well-known; Korea may have no inherent animosity towards China but they are still a US protectorate, meaning they will follow US thinking and don't write their own foreign policy; Phillipines is another US colony; Vietnam has a well known love-hate(or hate-hate depending on your view) relationship with China running back throughout much of its history.
You can't pin any of that on China as China's diplomacy failure, "friending" those US colonies may what someone in the west consider to be a "diplomatic success" for China, but to the Chinese it would be considered a complete sellout towards US influence in Asia.
As for the economic/financial management, just because they are a communist totalitarian government doesn't mean they have a singular "hive mind", they have just as much internal divisions and conflicting interests and opinions within different branches of the governing apparatus, just like... everyone else(shocking, I know)
That's why you always get the dyslexic muddle-through outcomes.
Where do Americans have most of thier equity/investment - homes as well. And for most, as underwater as the Chinese
The correct answer is - both brilliant and clueless. The brilliant part is their ability to manipulate their currency, steal secrets and factories for making things, and obtain mass quantities of resources for their country. They actually have leaders who want to improve and make China better, and government control lets them steer resources to the greatest need or acquire resources that no U.S. company can.
The clueless happened several years ago when they started to see their economy slow down. Rather than accept a lower growth rate, they came up with policies that inflated a multitude of bubbles and over capacity. Like the U.S. their only option is to wait for the bubble to pop.
No easy answers exist to pull China out of the mess it is in. It is becoming clear China is in a situation similar to what America faced in 1929 following a period of rapid growth and credit expansion. To say the economy of China is shaky understates the situation. The kind of growth we have witnessed in China during the last several decades has been extraordinary and was driven by several "one time factors" that have be played out.
To those who doubt just how massive the problems are they only need look to the newly constructed city of Ordos in Inner Mongolia. Most of the new town buildings are empty or unfinished. While the world noticed this city a few years back the situation has only grown more dire over time. Below is the latest in a series of articles concerning China's deteriorating economic situation.
http://brucewilds.blogspot.com/2015/09/china-economic-update.html
Good Christ, not you again.
The Ghost Cities. I feel confident they exist, I can't say how widespread they are.
But, and I have commented on this before, I see no way these cities have the water, wastewater or power infrastructure in place to make them functional. Infrastructure like that, cannot be built to operate at 5 or 10%. It needs to run at capacity or near capacity. If it sits idle, or underutilized, it's deteriorates. And it's very expensive to build, relative to the buildings it's meant to serve.
Sooo.... Either there is no or inadequate infrastructure, in which case this real estate is useless movie sets.. Or
There is infrastructure, and it's rotting by underuse. I doubt the corespondent infrastructure was ever built.
These buildings will rot before they are ever occupied. What a waste.
Theoretically, If you have a culture where a large percentage of population has existed for centuries living in huts, shacks and squalor then even the useless movie sets may be an improvment? To arrive at this level, armegadon would have to take place in China following or during the collapse of the rest of the world. This collapse may be taking place right now in the middle east but most likely will be contained to that area./sarc. Just a thought. On another note, during a collapse of any society the poorest may very well be the richest as they have developed survival skills coping with their existing situation that may not differ much from an actual collapse. For them, life just goes on.
So we are all doomed. In another article they say that US hegemony is leading to all out war, and here we see that China is pushing us down the cliff. I'd want neither of them to run the world. Water on Mars looks attractive, but I'm probably too old for that.
There is water here on Madre Earth at each of its poles. Not much difference and the travel is quicker?
China's dramatic rise since the early 1980s, when Deng Xiaoping's reforms occurred, has been nothing short of phenomenal. This remarkable success has to be attributed in some measure to the leadership's policies and decisions of the past three decades."
Good blurb, and a much more accurate picture of who China REALLY is.
It is a great mistake to believe ancient philosophical China is today's China. It is not, I believe.
Deng did nothing special but recognize (privately) communisim's failure, and seized the opportunity to build a new China on Nixon's opening. That was it. But, once the invitation by Deng was extended to western corporate power, the hell that mindless western outsourcing brought us today...began. As I've said, and this article concurs, the unmitigated bonsai charge began in the early 1980's--some 4+ decades ago...
I well remember this little man, sporting a brand-new, wide brim white Stetson cowboy hat in Houston back then. In his traditional communist Chinese "Mao" uniform, he was on a rockstar tour to pimp his 1.3 billion peasants. Like a real estate mogul wining and dining us to savor his near-limitless supply of $3.00-a-day labor, he didn't have to pitch hard to goose the salivating western corporate shysters to "come on over".
Like the mindless California Gold Rush of the 1840's, the western corporate bastards couldn't run fast enough to stake their claim to cheap Asian labor, mostly in China, but also, and initially, in Malaysia (lots of outsourced micro electronic products, for example). What began as a trickle, became an out-of-control torrent by the late 90's and early 2000's, and although many early warnings were delivered (Springsteen's "My Hometown" and Mellencamp's "Little Pink Houses" in the eighties, and Ross Perot in the nineties), few listened to them, and instead, bought the insane corporate schizophrenic mumbling about how free trade, and new American jobs--better than we had--would make it all work.
Of course, no one cared to see that would be impossible. No $3-per-day wage-earner in China would be able to buy much from us, even if he'd wanted to. Nope. That was beside the point. The point was corporate profits on immense labor and regulatory savings, and little more.
All we had to do was bless new trade agreements (and join the WTO), and buy like crazy, even if we had to use the easy credit inspired by Fed monetary manipulation, now made necessary due to ever-dwindling middle class incomes...and a global economic nirvana would be made magically manifest.
Meanwhile, China grew like a corn-fed spring calf, until a new manufacturing machine came to be, bigger than anything the world had ever seen.
NO top western corporate wise guy, or freshly-minted hot shot MBA apparently shared even a single neuron's worth of wisdom or long-range vision to inform them that, what they, and the receiver nations, were doing was ultimately suicide without the seed corn they promised actually being planted back home.
That seed corn was never sowed.
As the torrent of outsourcing raged, China began to see the gradual production of their own c-suite fat cat. Along with it, the birth of modern, western corporate fat cat thinking and behavior: fuck whatever comes between profit, bonuses, and shareholder "value". Exploit labor and environment, and partner with power toward small-minded, selfish (if unsuststainable) ends to maximize the above at all costs.
Greed is good, and opulence is even better. Lie as often as necessary, and even when it's not, if it makes your share price rise.
Build the biggest, baddest fucking China you can at a blistering pace, and watch the world marvel in awestruck stupor.
After all, we're "somebodies" now!
Fast-forward four decades later, and the inevitable train wreck set in motion long ago begins to take place. Debt galore everywhere, with now-unfundable western consumption patterns, and consequently, the economies of the west AND the east are teetering on collapse. Once-hopeful EM peasants are becoming fearful of rapidly approaching destitution, while the EM governments are growing fearful of peasant unrest blossoming into outright social meltdown, and perhaps, even Tienammen Square 2.0.
Despite the clarion calls decades before, imploring the mindless western corporate maniacs to stop, and rethink their bonsai lunacy (or at least slow it down until a new western middle class economy could be designed and deployed), these lunatics charged ahead, labelling anyone who questioned them or their "free trade" delusion as crackpots, and worse.
The arrogant stupidity continues even today, with 2008 teaching them not a goddamned thing.
m
those usa spaced based weapons will make anyone clueless
There is an easy way for China to fix the mess in the economy, turn the private debt into public equity financed by public debt to PBoC. That instantly bails out various debt ridden private businesses and they can continue to operate without causing job losses. As for the millions who lost speculating on the stock markets or real estate, there will be no tears for them from anyone else. The failure of excessive capitalism will only strengthen the hands of the Communist Party and not diminish it.
Governments are desperate in dealing with an overpopulated world. Thanks to Chairman Mao imploring everyone to multiply.
Same for the US. We're the 4th most populous, thanks mostly to ill-conceived immigration policies designed to balkanize, promote diversity and divide and conquer by our Zionist Globalist rulers.
Don's see how this is going to end well.
It is becomming obvious to even idiots that the Emperor has no clothes on.
China will turn into its opposite. This was foreseen when Deng Xsiaoping was first sent to the countryside.
You can pretty much do a 'America's Leadership: Brilliant or Clueless?' article simply by using Find and Replace 'China' with 'America' for this article.
"It's too early to say" = I dont know.
i think he literally didnt know and probably didnt care either. it is reall not some profound statement...
China's leadership is neither brilliant, nor clueless. What they are is caught responding to forces which they haven't had control over in over two decades.
Good food. Bad people.