aggiehawg said:
AtticusMatlock said:
China is dealing with deflation. They are also far more in debt than we are. The amount of paper they have out there to fund all of this crap they've been building is astounding.
A significant percentage of municipal budgets have been made by signing land deals with housing developers. As long as there was a housing boom, the budgets were okay. But the housing market is crashed. Municipal governments are struggling to make payroll.
A large percentage of Chinese retirement savings were wound up in real estate. People didn't trust other Investments so they were buying second and third homes which were just sitting empty. That market is crashed.
China is not a monolith. The current system of government has only been around for about 70 years.
I have been wondering why the Soviet Union cratered from fewer economic issues but China has kept on going.
Because the Soviets couldn't conduct currency manipulation in the manner China has been doing?
Curious as to your thoughts?
It's not that the Soviets couldn't conduct currency manipulation but that they allowed much less economic integration into outside systems. The Russians didn't produce goods for Western markets. Other captive markets that were reliant on Soviet military or economic support would provide more or less captive markets for Soviet goods but the demand wasn't high enough to supply consistent growth. So you have a kind of phantom growth through the Depression which was really a movement of rural peasants to urban areas and industrialization that hadn't occurred in Russia the way it did in the US and Europe in the mid to late 1800s. Then in the post War years their economic expansion was really based on those captive markets. That took them about 20 years for those client states to rebuild, well somewhat, and their reliance on Russian goods began to contract in comparison to domestic products. Then in the late 70s and especially 80s the poor decisions by economic and military planners started to cause a massive gap between the technological sophistication of the economies and the trade networks. The West further adopted the just in time model pioneered by Toyota, computing and communication just made things really start to expand. The lack of outside markets combined with corruption then finished the Soviets off.
China doesn't have a number of those problems. They're integrated into almost all world markets. They're stealing and adopting foreign tech developments and unlike the Soviets have been laser focused on putting their students into Western universities to keep up with and import as much as they can.
The Chinese do have a number of incredible vulnerabilities, their debt leverage, the structure of their financial system and the concentration of massive personal wealth in one segment (real estate), but also they have similar infrastructure issues. Ours is our electrical grid which is ridiculously vulnerable and their is around their river system. A huge portion of their population is around the Yellow, Yangtze and Xi Jiang rivers. Three Gorges has a very thick air defense net, but there are tons of these dams and reservoirs all over that would be vulnerable and would wreck their power system along with their agriculture which is centered on these river basins and tributaries.
The Soviets just couldn't continue to compete with Western goods and didn't allow access to those markets which limited their growth and innovation. The Chinese have taken the exact opposite approach which has allowed them to work their hybrid system.