Hello. I love ya! My question is: What happens if China dumps those dollars to the world market for goods and services during a SinoAmerican war over Taiwan? Or more to the point, how can they use dollars against USA?
Damn china is really faked their state treasury, they're much richer than any states in the world amazing Also did you say market monopoly as crime while also showing other 'west' country doing the same?? 🤔 That's very interesting half truth propaganda method, i must write that
I love it when you the west still think you can control China. And China loving it too. And also, when you the west thinks you cannot be controlled by anybody.
Would love to see more videos on how nations are "sanction-proofing" their economies by building redundancies, seeking to "de-risk" their economies etc.
As someone who lived through a sanctioned era. It's a "cluster fudge." In Apartheid South Africa the government tried to go it alone like Hitler. South Africa was the leading producer of gold at the time with its signature gold coin being the Kruger Rand (1 ounce fine gold) which became illegal to hold/tender in sanctioned countries. Exports were commodity based with a developing manufacturing sector at the time. South Africa like the Persian Gulf, modernised on the back of commodity revenue. It also created a rich English & Jewish oligarchy with the Afrikaners retaining political control as their demographics was the largest among the European & West Asian settlers. Apartheid had a weird path of categorising people similar to the Nazis as by default Jesus was an asian and thus a non-white. There were Persians, Turks & other west Asian muslims who were considered Indian (Islam is a semitic religion btw) with Jews & Christians from these lands were considered white. Moreover Japanese, Taiwanese & Philippinos were considered white but South Asians, Chinese & South East Asians were considered black/non-white. The 1980s saw the repeal of US & non-Axis powers' capital withdrawal out of the country. The first hit were the sweat shops who were heavily subsidised to supply the local market with cheap goods as only The UK, Taiwan & Israel were friendly to trade. Germany & Japan had no foreign policy so it was trade as normal. The prices of imported goods increased as the Rand slid. Interest rates hovered around 20+% during this era to attract foreign capital. Sanctions broke the back of the South African Apartheid government as they ran up several budgetary deficits in the 1980's compared to surpluses post war when foreign capital poured in to take advantage of the metal boom in the old Transvaal and slave wages to non-white workers in manufacturing plants. The international motor industry benefitted hugely from it during the wage discrimination era. Today its just called capitalism & prudent cost control. I haven't spoken about the South African Industrial Military Complex as it is another long dragged out debacle with a whole load of hanky panky going on. There was a civilian plane crash "The Helderberg" which was potentially guilty of carrying Military supplies on a civilian craft. All that loss of life, black on black violence, white & skilled flight out of the country etc for a Russian type oligarchy with all the trimmings supplied for free to rule the country as a "stable western style democracy." The police state affectly defunded & privatised for personal security. A defunded crimminal & civil judiciary to drag on court proceedings to bleed the disputed parties. Furthermore our host is a research fellow from a sister University of mine, UCT. He can audit my experiences with empirical evidence & referencing scholarly journals of the events as they unfolded and were studied & documented.
@@louvendran7273i have no idea who you’re replying to but thank you for the history lesson on South Africa I found it super interesting. It seems to me from afar like the current leaders of South Africa are extremely corrupt and sadly even worse statespeople than the government they replaced, who were oppressive but at least kept the electricity running. Do you feel that the current government is fixated on replacing white and asian officials with black officials for historical grievance reasons and that this is causing a talent deficit within government institutions? That is the perception I’ve heard and it seems accurate from afar but what do I know lol I’m Canadian.
@@AT-nw6crhat a load of BS. They were also incompetent just as the current government. The electricity they kept running were used to service 10 percent of the population. It not so hard to service 10 percent while leaving 90 percent in perpetual darkness and poverty.
Wait so China was ploughing it's dollar reserves into foreign infrastructures investments? And this somehow slipped through the attention of US economists? How exactly did they think BRI was being financed?
Exactly, completely misleading title. Every economist knows the dollars were being invested as infrastructure instead of being recycled back into US economy as treasury debt purchases. This is literally the single biggest reason for USA turning on China. Check the timelines.
@@zenastronomy Bingo, another title playing into the China fear. It is fast becoming really really old. As a businessman who travels to China regularly. Let me tell you sth shocking. The Chinese ppl don't care about the US. They are too busy growing their country.
They're not obliged to say anything, right? How covid started..The no. of people executed annually.. Their treatment of Uyghur muslims etc... They're not obliged to say anything. And the rest of thew word is not obliged to engage with such a secretive, ugly country.
I don't see this as a bad thing. Instead of holding a bunch of US bonds, they're just buying assets/bonds from third world countries. It's China's money. They are free to do what they will with it. It's risky as well since a lot of the BRI projects aren't holding up well after the pandemic. It also helps third world countries develop their infrastructure. This is an oversight on part of the American economists since Chinese reserves are increasing but is there anything US could have done differently? Like I said earlier, this is China's money. Unless the Americans want a repeat of Russia SWIFT sanctions, (and all the implications of that action except with China) the most they can do now is to reduce the trade deficit with China and bring more manufacturing back to the US. They're already doing this.
if they do that then they need to abandon the dollar as the worlds reserve currency. which means they need to abandon the US military empire, as the pentagon budget military spending is funded through money printing due to the US dollar being the world's reserve currency. the US can choose to bring manufacturing home and abandon it's military empire (doubtful Israel will allow that). or it will have to accept having a trade surplus with china and the world.
@@Cheesecake99YearsAgo The 996 work culture isn't the brag that you think it is. Chinese workers are less productive in terms of output value than American workers despite working longer hours. Also working longer hours like that means that there is no work-life balance. This means that there is no time to raise a family and consume. Regardless of the mental toll this creates, this a recipe for disaster for the future. It is squeezing dry the potential of the present at the cost of the future. I may not be a fan of the CCP but I honestly wish well for the Chinese people. At this rate China is going to become like Japan except worse since China wouldn't be as wealthy as Japan.
@@theworddoner most poor Americans work 2 jobs 60-70hrs as well. both countries are quite messed up. but china does seem to be tackling issues, building houses, sanitation, hospital, universal health care, etc. so ppl there have hope. i suspect the 996 culture will end once ccp thinks its harming the country more than helping.
@@theworddoner Not according to the Tesla CEO speaking on his factories who said Chinese workers are both the most efficient in production and produce the highest quality relative to his other factories in the world. He's been quite critical of American workers. Musk's metrics would imply that Chinese workers are more productive in terms of output value than American workers for equal hours.
Simplification alert: the way that reserves end up at the central bank in the examples is just the simplest example. In real life, in case of a surplus, banks or exporters might immediately sell Dollars and in that case the central bank might actively buy them 'back' on the open market. This achieves the same effect. But, is 'active' (rather than not selling reserves). In the end, the effect is roughly the same. So, I chose to show it in it's simplest form.
It’s interesting that you talk about currency manipulation as a crime. Can you HONESTLY name a country that doesn’t manipulate its own currency? All countries are managing the level, but of course they need to balance various factors such as trade competitiveness, interest rates, capital outflow, etc. Actually, you don’t mention that dropping your own currency hurts your the living standards of your own country. That is why you don’t see ALL countries just dropping their currency. Money is of no value unless you spend them or has the ability to spend it. With the actions that US did against Russia, I wouldn’t be surprised if China hasn’t used their dollars to buy gold and have the remaining treasuries serve as collateral against gold that they lease. This way they are somewhat insulated against currency sanctions by the US.
I mean it's not like u haven't watched this channel long enough to figure out after a while this channel has a bias and agenda....especially in whitewashing western especially American economic transgressions and past...... The way he made it sound like currency manipulation by China is a crime,like as though america has not manipulated its currency hundreds of times before,and engage in economic strong arm tactics,sanctions and wars to coerce or even cripple other countries economies...... It's one thing if u do things defensively to protect or preserve ur own country's integrity it's another when u do it vindictively just to sabotage others and even drive them to the brink of collapse just to undermine them,then on some misbegotten act of faith of humanity,the ultimate act of shadenfreud u send the imf in on some false act of "altruism" to bail them out on the condition they change and subvert their laws to allow america a greater deal of control and power from within..... Just ask Thailand and Malaysia and south Korea in the 90s......Malaysian pm mahatir had some choice words for america during that fiasco. Mahatir and Gaddafi is right,america is the spawn of the devil.... And don't forget us Japan trade wars and plaza accord and window guidance in the 80s.....that ultimately led to one of the most productive and prosperous economies demise...... Most people in the world have no idea of Americas true level of vindictiveness and depravity....
@@normankoo6159 He never said China did something wrong. He only said that we should also look at other things than central banks' forex reserves when we make conclusions whether a country is manipulating their currency.
@@MajorGarland There is a huge connotation difference between manipulating vs. managing. I dislike the hidden bias in the choice of words. It’s no difference to how the US uses terrorists vs. freedom fighters. As any educated person knows, the management of a country’s own currency is critically important. So, why use the term manipulate??
as you point out, it seems like the chinese are just doing what many other countries are doing, but on a larger scale this is only a concern if you're an anti-china hawk. i, however, like you, am a nuance enjoyer, and so prefer to think about how to update frameworks and priors
The problem isnt "anti china hawks", but rather chinese warmongering. They managed to threaten - and in some case kill people in skirmishes - an entire series of neighboars, and are stuck in a mindset of having to conquer and subjugate Taiwan. And thats besides all the constant cyber attacks, spionage and criminality from China. Even beyond that, China heavily using and being able to influence dollars is important to know for America. Theyre manipulate the market to get themselves an advantage over others. Therefor its pretty relevant how China is preparing for conflict, just from common sense.
Not only that, but China is not really hiding. Western economists just quite don't understand the chinese economic model as they try forcefit it into their models.
Hey Joeri, could you do a video on the Asian Financial Crisis of 1997? It was this event that made the Chinese government pivot towards buying US Treasuries significantly.
Chinese numbers are backed by the IMF, which is basically USA. The thing here is that western models of economy that are heavily based on private property and profit don't quite work on the economy of China, since their goals are not really aligned with the "rules".
This is only the half of the story. The Bank use these excess dollars to invest in infrastructures in developing countries (usually at a very delicious prices compared to the West and are of course good for local ppls). In return, China doesn't want the currency but specific mineral resources or agricultural products or the right to operate ports, and the money goes back to China as actual goods but not green papers. The US is now realizing that there is no way to plunder China's wealth through monetary policy as it does for many years. It's like a wheat field full of rebar. A scythe will only cut itself off.
Issue is that in a lot of cases it is not good for local people at all. There's numerous cases where Chinese companies do not employ local people within country but instead brings their own people in for the job.
@@tyronbasista2729 If not better, at least not worst. Go to one of those contries and see how those infrustrutions do good to ppls lives. Why ppl always keep thinking those contries are all sptuid enough to harm itself?
@@Jyryp Its not thanksgiving and I believe the leaders in those contries are not all idiots. Besides, if there is a better deal, the Westers could have done it decades ago. So, its the best deal so far.
@@ZLU-fc2ki cuz corrupt government. i live in one of those countries. i know the corruption, and the powerlessness of the people against the corruption.
I don't think it's that the Chinese government is especially smart, its just that Western Governments and Economists worship market forces and put the interests of investors before all else. So when a country doesn't respect these rules, they cry foul play.
Put simply, China puts those dollars to work by buying/building/investing in roads, rails, ports, infrastructure which drives economy both domestically and globally. Instead of sitting on it, or getting interest on it, wow who'd have thunk 😂
@@originalempa7037America bombs infrastructure and imposes sanctions on third world countries that refuses to let its elites loot their natural resources. China build infrastructure. How is it a problem again? And yes, I am serious. Name me one project the West built in 3rd world countries that makes their people better? All I get from westerners are lectures and sanctions and exploitation from Wall Street
@@originalempa7037I would argue that you do not understand China. It is questionable that it's in China's best interest to ruin any country's economy, they are the top trading partners for over half the countries in the world, but they still need to trade to keep their own economy going. Withdrawing any promised investment with the ones agree to participate in the BRI is a dangerous move will it hurt the local economy it would most definitely earn China a bad business reputation. End of the day, its their money, they can do whatever they want with it. Luckily they are investing in roads, bridges, airports, ports instead of military bases.
China is also buying gold in large quantities. If they use USD for it, they also lower their foreign exchange reserves, without actually lowering them. There was another analyst who claimed China was printing money, to keep its currency down. This usually has the effect of lowering the currency value, but in this case, it serves the interest of CCP,
It's not good for US, the Dollar is used in favor of US big banks but against the geopolitical aspect of US. China has cracked the code of the game and uses the Dollar against US. What's the plan? Collapse of the Dollar you will say?! CBDC are one horizon, tracking, monitoring, fine tuning, all the good stuff!
Can you make one video on the uncovered interest parity and why it does not work? I know, it is a bit more theoretical. But you make great videos and the topics you describe are very understandable because of you.
China's centralized economic model is working. We know this by how badly the US' decentralized economic model is failing to compete against China. Which is why this video was made to blur the lines of reality.
Frankly I think each country can and should do whatever they can to try to make their own country better unless it breaks some sort of treaty or something. The argument of "[Country] should not do this because it doesn't benefit me in [not that country]" is dumb as rocks.
Oh man the stupid in this comment... The idea is everyone benefits more if everyone is honest. I'm guessing you don't know what a prisoner's dilemma is but you can think of this like a prisoner's dilemma with 195 different players
Yeah exactly, but 'Merca think they are boses of the world. China do what it wants with its money, it does not need to 'hide it' from the US like a kid hiding something from its parents lol
Currency manipulation is a behavior that indicates a willingness to betray the interests of foreign investors. It makes foreign investors nervous that the Chinese government could implement capital controls like Russia did, trapping their investments in China. Essentially the US is complaining that China is selling its-self as more investor friendly then it really is. This is an argument it is making to major investors, in the hope they shift their investments to the US or US allies. But yeah this argument is purely for global investors. From the perspective of your average Chinese or US citizen, the government being willing to manipulate currency puts your interests before foreign investors, which is a good thing.
Nope. Not at all. People always invest extra cash this way. It's part of basic human nature and goes as far back as civilization itself. It's just, to you people "China* is the enemy" and you need newer and newer stuff to accuse them or justify some protectionist BS. *China and a few others.
@@BolchevoluIistaWhen there's no better alternative what choice do developing countries have, Everyone else just gives humanitarian aid instead of actual development aid to improve our infrastructure and production capabilities. Then we are stuck in cycles of IMF bailouts which end in our recourses being exploited to pay back the high interest rates on the loans. That's still neocolonialism just wrapped up in a nice package.
Still not sure what was wrong with what they did. If they want to stash money, so what? If they want to channel it to development loans, so what? Why can't they do that?
Thanks for guiding us to this article. It's brilliant. The conclusions of the article aren't the conclusions of this video though. There's no talk about having to sell BRI assets to defend the RMB under any circumstance, and no mention of intended currency manipulation. I think for once Joeri made something look more controversial than it should be. I don't want to sound like a 'zijlijnpisser', thanks for the great effort!
The CFL is a political institution, he is an academic researcher, of course he comes to a different conclusion. He gave you an objective analysis, the CFL gives you an opinion. Both did what they are supposed to do. That doesn't mean the CFL is wrong (although they don't have the best track record), just that their opinions shouldn't be equated with the opinions or research of economists.
Good point Bob! Although that article is the main source for this video, I actually used many others and indeed draw slightly different conclusions. Maybe I should have been more clear about that difference.
@@MoneyMacro You don't have to do anything but be yourself. You're the sole sane economist on YT and we should all thank you for that. Personally, my wife and daughter are Chinese, so I'm extra-sensitive to China-related innuendo. Eg. attributing intentionality where there is none or using words like 'hiding' (the article says "those funds are - correctly - no longer counted as part of China’s official reserves"), 'scheme', 'currency manipulation', or implying that the US has the right to know exactly where all USD are once they enter international reserve status. China does strictly control capital and foreign exchange outflows, but there are very good reasons for this. It's easy to forget that during the '97 crisis, it was a source of stability in Asia exactly because of these controls, and we can be sure they learn their lessons from history. The redirection of USD from the bond market and the PBOC balance sheet to policy banks, commercial banks, and BRI funds I think has an enormous positive impact. As Setser seems to acknowledge. it further increases financial stability (with even commercial banks attributing to this), and the use of accumulated savings to fund production or infrastructure is the very essence of financing global growth. Forgive me for the long-windedness. Getting me started about China criticism is like getting a Belgian aunt started about her neighbor's messy lawn. Please be well, and off to 300k subscribers!
@@BobBogaert you have a more optimistic view of China's moves. I'm still skeptical that these redirected funds to the BRI program are a net benefit overall. Countries have taken on unsustainable debts to fund projects that won't cause enough economic activity to justify them. In the current market of food scarcity through Ukraine war and rising interest rates, some of these BRI countries will need to have their debt forgiven or reworked for a longer duration. Though if I studied and built a family in China too, I'd want to hopeful also. Though if your daughter is young, you're probably moving to Belgium for your daughter's education.
@@Nabrolo I'm sure some of the projects will fail miserably. That's a statistical necessity. I'm also sure the media will make the most out of these, that's a geopolitical necessity. But if we look back 10 years later I will be very surprised if any of the predictions of the 'death trap diplomacy' hold true. As for education, I was asked that question a few times before, and I always answer that if I can survive 12 years of Catholic school and still think for myself, I trust my daughter to be able to finish Chinese education unscathed and open-minded. It's difficult finding the balance between cynicism, skepticism and naiveté. I try to be a skeptic optimist, and so far that works. My best to your family. 保重!
This is just shifting reserves from riskless assets to risky assets. It is just tunnel vision of neoclassical economists which made them unable to spot this.
These claims are a bit dubious. Even if China's numbers are opaque or distorted, the claims and research by Luis Martinez on China's GDP, which you covered, and this new claim, are rather roughshod, and its hard not to assume that they're politically-motivated to a significant degree.
Why are they dubious? What are the red-flags in the research? For this current video, undervaluing your currency is a tried and true tactic that has been used extensively throughout history. However, it tends to invoke a counter reaction by your trading partners. So, it makes total sense to hide it. Also, as noted many other countries are doing this as well, China is just the biggest.
@@MoneyMacro The Martinez one I found rather dubious - serious limitations to nighttime light density as a tool of GDP analysis - this one I found much more plausible, but I find it hard to believe that China doesn't mobilize these "hidden" foreign currency holdings when faced with inflation at home, and the scale alleged by mister Setser. I feel like there are other plausible reasons why "state-linked" investment firms and banks working in a multitude of nations and contexts might want to hold dollars.
@@MoneyMacro By the way this is the best economics channel on RU-vid hands down in my opinion. I love these topics even if I'm skeptical of some of the claims in the papers.
@@rashid8646 China's inflation is very low, sub 1% if I remember correctly. They don't need to mobilise anything. Also, as the primary manufacturer of many components/finished goods, they're less prone to inflation, provided their input costs remain low.
@@rashid8646 This video is not about the Martinez paper. It's about a report/paper by Brad Setser, which is quite well-sourced and well-reasoned. I enjoyed it and found it thought-provoking. Specifically, what/why are the claims and evidence that you object to? I personally think there are a couple limitations, but it's as good as any of the research coming from Rhodium Group or WEF these days.
"Hiding" is overblown. In a crisis or war, the Belt and Road projects are not readily convertable assets in a crisis which China could dip into for cash. They reside in mostly poor foreign countries which could easily seize them by "nationalizing" these projects. China has exactly zero expeditionary forces to enforce its ownership of these projects anywhere outside of its immediate southeast Asia region. Without this long range far reaching military force to enforce ownership, China doesn't really own these projects. And if it did start throwing its weight around in places like Africa or South America, it would simply be doing what the US did during the Banana Republic years of American imperialism. In its early years as a third world country, China itself was quite clever at stealing capital investments from foreigners by simply removing official licensing or land rights to any projects that were funded by foreigners that displeased the CCP, thus "nationalizing" these projects /factories.
Policy making is based on simple principles of causality and interdependency. So no policy is made in a vacuüm. The amazing thing of China's policies is that they think long-term on some issues of statehood. And the west would do good to balance its messy policy making by taking example to that. Especially in matters of environmental change short term policies, thoughts on profit and loss, electability etc are recipies for disaster. If we can think and act longterm while maintaining our open societies and democracy that would be the best.
its' what happens when you have a meritocracy and very very smart people running things (instead of cheerleaders in a popularity contest)...reminds me of high school student body the way the west is run
If a Chinese exporter is paid in USD, they go to their Chinese bank, which exchanges the USD for Yuan. But what is actually happening is that the Yuan are being printed out of thin air and the USD are being kept by the central bank as additional USD reserves. In other words, the incoming USD are not being sold for Yuan but are being held by the central government even though they were being paid to the Chinese exporter. Isn't the printing of additional Yuan highly inflationary?
To be clear, youre asking why major international trading partners should be open and honest with their finances? Or what impact not doing so has? You actually need that logic spelled out further than it already was? Just kinda glossed over the whole video and skipped to the comments? When the answer was literally 30 seconds in?
China "should" not. However, this policy of hiding shows bad faith on china's part. So the real question would rather be, why is china not at least honest about its industrial policy via currency manipulation.
Does this change anything regarding their gdp being 60% lower? I mean, does this mean that decades of stagnation/very low growth are not so inevitable, or no? Ehat exactly do these few trillions imply? It doesn't seem that much compared to the 25trillion u.s. gdp f.x. I don't understand why this is so significant(?)
This is significant on the international scale, less so on the Chinese domestic scale. I would say the main implications are that China's currency is less vulnerable to a run than we thought and that this might endanger belt-and-road countries.
@@vinhbao9738 I think the whole demographics thing is a bit overblown, although I don't think it's irrelevant. Basically, if you raise the retirement age, you solve a lot of the problems. Surely, people won't be able to perform as well at 67 as they can at 40, but they can simply go back to slightly easier job positions then. F.x. a surgeon can go back to being a general practitioner at 65 for another few years, and a manager can go back to doing regular tasks of that department. Practice also shows that too many children cause more issues. This is why many African countries are developing slower than the likes of Romania and Bulgaria. Their gdp grows, but so does the population, and those kids can't really contribute much just yet. The best option is 2.5-3 children per woman, like Israel. But immigration is generally bad. Either the immigrants will have more kids than the locals and make locals become a minority in their own country, or, as is usually the casez they will also end up below the replacement rate in the next generation. The whole fertility thing is mostly a product of feminism. If women are told to focus on uni amd careerz they will do so, and postpone children, or even not have them at all. Israel is an example of why the degree of development is not so important - it's just a cultural thing.
@@temporelucemtenebris5313the demographics problem is not overblown considering japans economic struggles. And you do not take into account the very or maybe even extremely difficult task of increasing the retirment age. Just look at france, and even if china doesnt have a population as prone to protests as france they still have a government that relies heavily on public preseption unlike western democracies. If the chinese state increases the retirment age then there only one party to blame and no new parties can be elected as in a democracy.
Correct me if I'm wrong, but it seems like meritocracy is valued in Chinese society. Your leaders are all well-educated and experts in their respective fields.
@@evilleader1991 I was not born in China and never grew up in China. In fact, I am fourth generation overseas Chinese, so Chinese politicians are not "my leaders". I just made a remark that Chinese politicians made preparations to stave off sanctions (in case they occur).
Is there some good book you might recommend to learn more about macroeconomics? I'm a student of foreign affairs, but certainly I deem the material that I'm looking for should be written in plain language
Yeah, that's not gonna happen. More likely the reverse *could* happen. I mean, what if everyone in debt to PRChina holding USD suddenly asked PRChina to pay up - in USD?
@@slypear it's not going to happen because china is not self sufficiant, they would cripple them self more than the US. But I do not understand your point. China has enough USD to pay in your scenario.
@@zusammeneinganzes8751 Certainly China does have a lot of USD, but I'm wondering how much they would have if market rates changed not in their favour - and how long they would last.
As the world de-dollarizes, China should be buying gold with those 'hidden' reserves.. It is already selling US treasuries and buying gold. Right now, the RMB is losing value and the dollar is strong. (because the US is raising interest rates).
11:00 - 11:14 Singapore has been doing that for many decades simply because we have no internal market or natural resources of our own and needed to invest outwards into profitable/potentially profitable companies in order to generate future returns. For Norway and Kuwait I think it's because of their reliance on hydro carbons which they know wouldn't last forever, so they needed concrete plans to diverse their oil returns to hedge against the day when their reserves run out.
Which is very stupid, because the only thing that keeps to Dollar worthy is global ZOG-Terrorism to pay for commodities in Dollars. When commodities aren´t paid in Dollars anymore, so goes the artificial uplifted Dollar demand.
@@alexanderivkin7086 the values of the investments we made are denominated in dollars. But in the event the dollar loses its dominances we can just re-negotiate based on the next dominant currency, be it the yen or euro.
You asked for opinions,so… You are totally wrong to blame China. China is using their money for global cooperative infrastructure projects and one effect of these investment projects is the stabilization of their currency value. Implying that China is working on global infrastructure just the keep their currency low, ignores China’s culture of cooperation. China is all about win-win situations, unlike the Americans.
Gordon Chang is checking off another box. And the US can call its trillion dollr debt the CCP inherited from the ROC at anytime. Unless the CCP wants to admit the ROC is still sovereign 😂😂😂😂
You implied that not just China manipulates the currency but also countries like Norway and Kuwait, and the animations highlighted Germany. I was curious if you meant that all these countries manipulate their currencies? Is the Norwegian sovereign wealth fund a type of this currency manipulation as its main purpose is to invest the foreign currencies Norway receives in foreign assets rather than converting it to NOK?
Trillions of US dollars of bond buying and economic relief packages by the US government to support growth and encourage inflation have already resulted in significant depreciation of the US dollar against most currencies and the slide is expected to continue. Europe and the UK have taken similar measures but not as extensive and there seems to be rising sentiment that both have to match the US to prevent further gains against the dollar. Doesn't this make the US the largest currency manipulator?
Yes, and right they are. That way they avoided the 'Dutch Disease': killing off normal sectors' competitiveness by 1 sector that drives up the currency (natural gas). Oil and gas in the case of Norway. The case of China is different, because they have a very diverse economy (and are much bigger), therefore these tricks distort global currency values. Germany's trade balance problems are absorbed by the weaker Euro-countries, causing Dutch disease like symptoms there.
But doesn't this create more demand for USD? And the demand for dollars is what keeps it the world exchange currency? I thought a stated goal of the CCP was to undermine the USD as the world currency. Genuinely asking, I am probably misunderstanding something.
In the light of US sanction and Freezing of Russian reserves all middle power nations are looking for Other reserves than US dollars. Including Saudi, Brazil, South American Nations.
The creator is mad that China hasn't privatized their banks like in the US where billionaires can them drain money out of the system to hoard away from the general population that would spend the money on things like houses, cars, or food.
So the basic conclusions of this video are: (1) it is better to have a meritocratic system where the leaders are well qualified for their jobs and have reasonable leeway to do what they're supposed to do, than a system where two (or more) parties spend all their energy tearing down each other with megaphones all day, with billionaires spending obscene amounts of money buying politicians; and (2) it is better to have a strong central government that can act in the national interest, than an alternative model which says all forms of government are a restraint on people's maximum freedom and government must be drowned in a bath tub. Got it! I knew (1) and (2) were true all along.
Bro you sound like a smart Indian and you are spot on, I wish my country have real politicians who can act not for themselves but also the interest of the people. I don't really care if you are a thief or a god, I just need to provide for myself and family and I am your believer.
I have heard most of the Chinese debt (central or local) is kind of “constructive debt” which was spent mostly on infrastructure development or asset procurements domestically and internationally (BRI) to develop positive incomes in coming years although the number spent over years is huge ,about 320 trillion Chinese yuan, i.e. 40 plus trillions US, some examples are high speed train network construction of 42 K currently , 3500 kms each year now to reach 70 k in year 2035; ports, highways, bridges, 5G or 6G network, green energy network constructions, rare and essential industrial mineral assets procurement in Africa, South America and everywhere else including lithium, copper etc. They are not spent on welfare, direct federal funds to public public or military budgets to consume, so they are “smart debt” in reality. What’s more sad about the spending tragedy of US is only if it can spend $6 trillions in Iraq and Afghanistan war in domestic infrastructure and high tech, natural resources and education instead. It certainly required long term strategy instead of the 4 year election campaign goal.
Debt can be unsustainable even if it's "constructive". That's why BRI lending to most countries have declined after China spent so much. It's also why the real estate crisis occurred in China despite the industry building so many homes. There is such a thing as too much and diminishing returns.
@@100c0c Sustainability is exactly the biggest problem of US, it’s meaningless without checking the net asset balance by comparing total debt and asset, via a report of McKinsey Global Institute in 2021, China's net worth reached $120 trillion in 2020 to overtake the U.S.'s $89 trillion. Second, China Gross Savings Rate was measured at 45.9% in Dec 2021, compared with 45.9% in the previous year. Comparing US Gross Savings Rate was measured at 17.8% in Dec 2022. Third, China Total Deposits was reported at 38,665.054 USD bn (386Trillion ) in May 2023. That McKinsey report also show China had in 2020-21 surpassed the United States becoming the wealthiest nation in the world.
There is really no Chinese debt because the lender and borrower is ultimately the same entity as the debt is internal. There are no interest or principal payments and all debts can be wiped off at any time. The excess capital from exports/imports, after meeting all obligations, is allocated to internal infrastructure, critical industries or BRI. China doesn't owe any foreign governments any money.
@@thetaomega7816 Oh yeah little anchovie, Have you heard of Animal Farm ? They refer to a trick called scapegoating to distract from the real issue. China has become the scapegoat to divert from all the waste and corruption happening in Murica. Where did those billions sent to Ukraine go ? Could healthcare and homelesness be solved with those billions instead ? For sure, but scapegoating on China makes it easier to steal those billions under your nose , right ?
Trump's buffoonery was an embarrassment for the US. What happens now that China is losing it's ability to export? I have noticed that even manipulated state data shows a drop in exports.
Some say it's china's business what it does with its earnings (and be opaque about it). However, isn't this policy really part of an industrial policy that can be likened to the "beggar thy neighbour" policies that were "popular" in the thirties? (And that did not really serve world peace.)
China is Manufacturer..so they can move this way without bankrupting any country . Those countries will be buying Chinese brand products instead, which will still be China's gain..
@@calvinblue894 Not sure what you mean. In what way is this different from a beggar thy neighbour policy that has governments actively advance domestic over foreign production? (And what do you mean with China is a manufacturer? So are the US and the EU. They even manufactured more before China started its export oriented "industrial policy", which underscores my point I think)
@@Ed-bq4rp It's different..you just don't see the plot.. In China's positioning as a Manufacturer, West defame China companies.. Every company need customers to evolve, chinese companies need customers to be competitive. Just think Japan if they were blocked back then. Japan undercut the West, so does China. But the moment Japan products became better, they sold higher prices. West blocked China from that and threaten to pull companies out.. endangering China. If companies all pull out, China will swing back to poverty, and population cannot take rich to poor direction and will revolt.. that's West plan. So..China play a different strategy..to save itself. With these countries dependent on China, they will buy Chinese products and help China move forward without West endangering. See the plot?
I wholeheartedly concur with What they need is just their hegemony. One of the most prominent instances of this is the lengthy history of colonialism in Western nations. By plundering and looting other countries, they have expanded their empires and grown via exploitation. The present global financial structure, which goes by the titles of the IMF (International Monetary Fund) and the World Bank, was established when colonialism was no longer seen as acceptable. These technological systems have frequently been created at the cost of developing countries in order to benefit Western nations and their financial interests. It is disappointing to see this predatory behavior continue for so many years. Sadly, not much has changed from the outdated colonial structures, and these discriminatory practices still exist. And here is nothing new to say Western countries back its Shameless title!"🙄🙄
Without colonialism Europe would still be feudal, as there would not be enough wealth for any other social structure. Africa would still be a dark continent. Perhaps you would prefer the world that way.
@@alanjenkins1508 Just as you disagree with your perspective, just as you also discover what you want! If you don't understand You must be tougher in your pride, I assume you get what I'm saying, since what's happening doesn't mean the world is going to end for you, utilize your head! Why on earth are you here, then? To visit here and make such remarks is quite strange. Well, I must say, I feel really empathetic towards your unique mental condition! 😄
Man these Chinese are so smart and clever. I have a feelings countering them won't be like Soviet Union, they are too far sighted and their every moves are like a chess.
Because their socialistic views and system make them act differently, for example, socialist country with communist goal always want to lift up the living standard of poor people by industrializing these poor countryies. Profit-driven Capitalist country would never want to do that since it would bring them no quick profits. Since their capital are privately owned by the capitalists, they would never have the incentive to help lifting up the living standards of poor people. China literally becomes a rich socialist country with communist goal and with a big war chest in the State's hands, not in individual capitalist. They would use that big war chest to serve their socialistic or communist goal, but not in Soviet Union Warmongering style. They certainly have more ambition and intensions than capitalist countries to help poor countries on the road of industrialization. But Chinese socialist government do in a more sustainable manner than Soviet Union did. So what I actually means is that Chinese find a way which serve both their investment needs ( using the dollers ) and their socialistic needs ( helping poor countries achieved industrialization)
@@directxxxx71 What? So PRChina somehow invented socialism under the pretext of Western Marxism? Get a friggin grip, man~ Like nowhere else has better functioning socialist governance than a totalitarian COMMUNIST country than PRChina?
China get USD from trade surplus and give Belt Road Projects to many countries in infrastructure projects that mostly use China material and workforce this generates more export and production of China . Smart idea.instead of buying US bond. US bond does not c Increase China GDP
As I see it, China did not hoard their dollars but put them to use in the Belt and Road Initiative, which simply is an infrastructural investment. That is what is the west should do too, rather than sinking huge amounts in defense and wage constant war, which is basically the least beneficial production and the least useful consumption: Government consumption. Meanwhile, we let the infrastructure, free markets, social coherence and fabric of our societies go to waste. Maybe our economist could look at that, instead of letting themselves be used in the blame game.
Every country has its own monetry policy. Most countries make it illegal for private entities to hold foreign currencies in CFC accounts after a specific grace period as they can then potentially speculate or manipulate their local currency. The US to fund its war behemoth has chosen the route of debt accumulation/levered funding. Thereby accumulating their debt eventually into an unsustainable level. This will come when China has a substantially larger money supply than the USA & its military might is much stronger to weather an ailing US attack who continues to fall every year by investing more into defence with diminishing returns as it holds up phony wars to feed its bloated military industrial complex. Moveover, another latent play with China is to substitute the dollar with its BRICS partners. If the BRICS nations manage to sustain growth levels over 6 or 7% in the next 50 years they will replace western Europe as the counterbalance of the world economy. Brazil has wonderful potential if corruption, even wealth distribution & CIA meddling is routed out. Russia is a question mark, the oligarghic system ensures that there can never be real sustainable growth as national income is spread amongst the top with scraps falling to bottom if possible. This diminishes a strong retail market which is the lifeline to consumption activity in an economy. India is rising quite well but still has to uplift its masses from abject poverty to empower the masses to reach developed country status regarding economic consumption ratios. It has issues with poor manufacturing quality with high tec & industrial machines. (At least one generation behind in producing hitec, high yield products.) Their motor industry or yellow goods market personifies this. Sweat shops are the prevailant growth market. This is a pseudo sustainable growth as an increase in household purchasing power will drown this type of industry. Next is the severe brain drain as wages for professionals are low due to there being an oversupply of professionals and great disparity in income & wealth holdings between industrialist elites & the growing middle class. Indian elites refuse to share. Poor national infrastructure to improve supply chain lags & ease of business. Bureaucracy & corruption plagues India. South Africa has all the hallmarks of the 3 former. Infrastructure & business framework in South Africa was excellent (1st world) but the but awful oligarch rule over the last 20 years has placed South Africa in a role more & more like Russia so it also a "question mark." to realistic future sustainability. The USA is definitely on its way out. The question is when, how & most importantly what cost to humanity.
The CCP has a demographic problem Say you got a dumpling shop. Say you got 10% less customers and the customers are older. (older customers eat less) Will business be better or worse? The EU and Russia have demographic problems and the global south doesn't have money. Less individuals = less domestic consumption = less money for CCP companies = bad economy = less money for the CCP government = less money for the CCP military.
@@jonathanaustinstern1 Agreed. However the same logic applies to US hegemony which is already on a slippery slope due to its foreign debt and constant deficits due to tax cuts for the rich & maximum defence spending. Inequality in the US & many other OECD capitalist countries have been steadily rising. The super rich are not going to buy cheap dumplings but champagne & kobe beef or more likely binge on cocaine & cat to stay thin. I am not a fan of the CCP nor the US because they are both despotic & contradictory regimes with different marketing & packaging consultants. World War II taught us much about humanity & greed but people are fickle & vane. Capitalism rests on a proviso of infinite growth, which we know is unsustainable. I have been fooled once by Reaganomics & Milton Friedman. I have my whip lashes to prove it.
@@louvendran7273 Yes Americans don't live well. Yes Americans are not happy. That being said The CCP and Russia fail before the US The EU is facing demographic collapse and the end of globalization they fail as well Anyone else going to beat the US?
South Africa has massive structural problems and is basically a failed state in most respects. And India's Jaishankar has denied any BRICS currency. BRICS has always really only been China, it's a Chinese institution pretending to be multilateral. The biggest problem for many developing countries will probably be climate change and its effects moving forward.
I would like to know what international law or what authority China's money policy is breaking the rule with? Probably none? "Hiding" isn't it in this case not illegal?
China should create an organization similar to the European Union that encompasses the BRICS countries and promotes their economic influence and friendly business relationships. Through this organization, they can initiate business activities among themselves and within their own countries, benefiting everyone involved. By countering the hegemony of Western countries and moving away from their exploitative practices, these progressive nations can not only thrive but also advance rapidly in their own respective ways. It is crucial to expedite this process.
You touch on this aspect briefly but I think we need to stress more how permanent trade surpluses are detrimental to China and profitable to the US. The end goal of the Economy is to provide consumer goods. Saving, investing and exporting must be done but only to serve the final goal of consuming. A powerful nation takes away brains, capital and consumer goods for the rest of the world and gives worthless debt, ever expending until it pops! When the West took away Russian dollars/euros, they basically took the gas they received in previous years for free and Russia lost its gas.
@@ThomasVWorm I agree (also, their economic openness/servitude allows them to learn/spy on Western technologies) but at some point, China will need to find a financial and commercial way of turning this enormous trade surplus of consumer goods from America to their own people.
@@ThomasVWorm I agree with the general idea, although it is not even about "fair distribution", the goods they send to the US are mostly given away, like a tribute.
Yes. But, written by one of the most respected economists in this field and whose blog has been written about by many of the major financial newspapers: Beware a Chinese ‘dollar avalanche’ - on.ft.com/3NtAssU via @FT
The CPC has long since learned how to subordinate capitalism to serve socialism with Chinese characteristics as Deng said it doesn't matter what colour the cat, as long as it can catch mice. 😊
Another video filled with half truths used to distort a message with a crafted agenda. Here are some time lines, and btw everything I am about to say have been discussed by international experts. In 2008 the western banks and institutions imploded. The G7 nations did not have the ability to inflate demands and pull their economy out. So treasury secretary Hank Paulson was sent to China to ask/beg for help. The Chinese at the time had an urbanization rate of only 45%. They knew that in order to become a developed nation like USA & Japan. Urbanization rate will need to be increased in the next 30yrs to about 85-90%. So China took that opportunity to build dozens up dozens of brand new cities from scratch. In a 3 yr period, China used more concrete than USA used in the 20th century. These cities initially did not have ppl living in them as the 1st step was to locate key services like hospital, mail delivery, school there. Hence all the videos you probably seen 5-10yrs ago about ghost cities. All of them, are now populated with people. Simultaneously China tapped into its ppl's saving (Chinese save on average 45% of their income), to buy massive amounts of US treasury bills. This twin action of creating massive demand of raw materials and buying of US debt helped pull the US and G7 out of a dangerous situation. By 2010 China started to voice concern after Fed's 4th round of quantitative easing (printing money), which dilutes China's holding. But, we USA basically flipped them the bird and told em it was their problem. In addition, a policy paper was published by the Rand Corp which stated that if in the future China gets uncooperative US navy can easily choke of straits of malacca since China did not possess a blue water navy. Her ships were all small and outdated and only can function as coast guard vessels. Check the timeline on google to see when China started their modern destroyer building of the type 52d, type 55 etc. They all started after 2012. Also around 2012 Xi became President and proposed the Belt and Road Initiative. Investment into those participating nations will be in dollars. Thereby, giving China a way to use the dollars without buying US treasury which is constantly being diluted by FED printing. So, to call this China hiding US dollars is ridiculous. It insinuates two things. 1) US had a right to those money. 2) China is doing this for nefarious purposes when they are trying to protect their money. Any economist worth their salt knew where the excess dollar China had were going.
Didn’t the FED deposit large amounts of USD in banks FED accounts which couldn’t be moved (exchanged for foreign currency) but used as collateral to help stabilize the banking system? Sounds li be ke China is doing the same thing but with USD rather than just printing their own currency … why would the Bank of England not have the same ability as all other central banks? Perhaps economists just don’t get banking in any system.
They've been buying gold too. Their reported gold reserves are reportedly far lower than they should be given the amounts they have bought. I wonder what that's about? I see Chinese state banks were using $ to buy Yuan yesterday (Thur 20/7) to support the Yuan.
The US has around 4 times the gold reserves of China. The EU combined has more than the US. It's not likely China would be thrilled about going to a gold reserve standard. They really haven't been accumulating much of it, anyway.
@@MrCarlGW Going to a gold standard is not a competitive move against other gold holdings. It doesn't matter how much gold other countries have. It is merely a standard. And, curiously I never referred to that. So your denial is telling. _"They really haven't been accumulating much of it, anyway."_ Total rubbish. Either get informed, or stop trolling.
@kevinu.k.7042 You aren't informed and make no sense. If gold us the standard there will be a value assigned to it. The more you have the more it's worth. Look at a chart of gold purchases by China, too.
@@MrCarlGW There is an international gold market and that is the value of gold at any given time. No, the more you have does not make gold worth more. As for Chinese gold purchases some work was done by an American economist. He compared the amount of gold purchased on the open market over a few years to the CCP stated Gold reserves. He showed how the stated gold reserves did not reflect the purchases. I've now muted you because you resort to aggressive posts when there is not need. Trolling.
It was a great idea, until the infrastructure they built abroad started falling apart and some of the countries couldn't pay back the loans anymore. The whole idea of foreign currency reserves is that you try to keep the money liquid enough for emergencies. When you build a port in some backwater in Sri Lanka because it's the president's hometown, that nobody wants to use, you cannot liquidate it for more than pennies on the dollar.
lol in your dream. And please, you don't know nothing about sri lanka case, hence show of your ignorance about that. Typical brainwashed victim of murica propaganda 🤡🤡