I like the quote: "The problem is not the problem. It is the unwillingness to do what needs to be done, that is the problem. "
As it relates to China, aside from a few savvy legendary investors, many of us in the US are still in the denial and anger phase of the 5 stages of grief (denial, anger, bargaining, depression, and acceptance). We either denigrate China (not really successful, will collapse soon) or are angry (what they did is unfair).
That is no way to win an economic competition with China. We can win economically, but only once we get serious.
Getting serious means, not bad mouthing China, but>
1. Get moral. Make deals that are win win. Keep your contracts. Do not engage in deceptive but legal practices.
2. Go local. Develop your local economy and trade for things you don't have or can't make. Take care of your own citizens first.
3. Stop plundering. Plunder based wealth is in the long run a loosing game. Countries that play the game in the long run become poor as they become focused on providing luxuries to a select few, while impoverishing the society as a whole.
In other words, let China do what it is going to do, and instead focus on what your society needs to do for it's long term benefit.
China and Russia only need to wait the US out. The hegemon will collapse from its own internal contradictions. The noise it is making is not from a position of strength but the death spasm of a failed empire.
- ""The unstoppable rise of China"". What are you guys smoking ? China has a GIANT debt problem !!!!! When / If the rest of the world slows down then China won't be immune / can't detach itself from the rest of the world. Then we will see a repeat of 2008.
- I am curious to see what happens to both Russia and China AFTER the Ukraine war has ended. I am curious to see how then these 2 economies will do (financially). To be honest, I am not (too) optimistic about China.
And how about the US' huge debt problem, in which part is owed to China?
The real take on this is, China is not in competition with other countries, it simply wants to rebuild its honor and find back to its old traditions which it rightly so is quite proud of. Are they wrong in doing so?
You seem to make the mistake that the West often do, that was pointed out in the beginning of this talk that the West thinks China is like themselves, which they are not. China simply wants to improve, not conquer.
- To be able to fight that Ukraine war Russia and (I assume China as well) had to (massively) increase their war production. The question is by how much russian production right now is tied to that war in the Ukraine.
- Currently China is also preparing itself for war (think: extra production)
- Agree, the US has a "debt problem" as well. When / if that "debt problem" is going to cause more "disruptions" in the US then China WILL feel the (Negative) impact of that as well in its economy.
- Agree. China is very likely going to rise compared to the US, relative to the US. But only in comparison / RELATIVE to the US. That could mean that china goes down by say 20% but the US could go down by say 50%. Even then China rises against the US.
- The West doesn't have its own set of financial / economical mechanisms. The financial / economic rules / laws are the same for EACH country on planet Earth. Through its Trade Surplus China is tied at the hips to the rest of the world / the US.
- I am NOT / far from convinced that China has no "Imperial Ambitions" like the US, Britain and Spain had in previous centuries and build their Empires. Similar story for Russia.
- Let's assume that there are only 2 countries in the world, US and China and that China has a Trade Surplus of say $ 100 billion then all of those exports (in this particular case) go to the US. Then the US automatically has a Trade Deficit of $ 100 billion (as well). If / When the US enters a recession or worse then it makes sense that US imports will shrink as well. And - in this case - the chinese Trade Surplus will shrink with the same amount as the US Trade Deficit shrinks. That's how China is tied to hip of economic trends in the US and in the rest of the world.
- China has such a large Trade surplus because it has been surpressing growth of chinese household income.
- The acronym BRICS contains a C and I. These 2 letters stand for China & India. Both countries have a debt-to-GDP ratio of over 60%. The official (!!!) ratio for China is 60% and for India is 80%. So, when they hit the next recession both countries will be hit "right between the eyes" and suffer the consequences as well of these high debt ratios.
- China earns A LOT OF money by exporting A LOT OF stuff to e.g. the US and Europe, making itself vulnerable to the next recession (or worse) in those countries.
- Based on information from the internet the chinese debt-to-GDP ratio is much higher.
- If Mr. Diesen wants to have better information then I would recommend you to ask one Micheal Pettis to be interviewed. https://en.wikipedia.org/wiki/Michael_Pettis. He is also active on Twitter.
- My personal opinion is that the era of "Super Powers" is over. I believe that we will see the rise of multiple "regional powers" instead and I think China and the US will / could be 2 of them. This assumes that these 2 countries each won't fall apart into several smaller states.
- A good comparison is what happened to the rise and fall British and the Roman Empire. As time went by the government in the capitals became weaker and weaker. and ultimately these Empires fell apart. So, it's not unlikely that this is going to happen with e.g the US and China as well.
Chinese have an old saying: those who come up strong fast are likely to fall back with equal suddenness. The organic growth of a country is a slow brewing process, the same as the organic growth of a company. Leverage can buy you some speed, for a while. But the "fundamentals" will recall everything back to the "norm", what the true underlying conditions can support.
If you ignore the political history and social changes in the last 100 years of China, AND if you have focused more on the skyscrapers, the dams, and the machinery that made both possible, then your conclusion would be more or less as discussed in the interview. But if you consider both the fiscal and moral deficits in China, then China has got at best some pieces necessary to make a military power, maybe even a global military power, but China today is still far from ready to make a good country for its own people and for its neighbors. Ask the Koreans and Vietnamese how their countries fared when China was strong historically.
Resource depletion and population growth are two major problems. If you like, the full deck of problems facing China is a miniature snapshot to be faced by the whole world. China has had a hard time solving these problems, and likely the world would as well. China so far has "kicked the can" down the road and borrowed the growth from its future, somewhat similar to the USA. But the balloon had been leaking at the seam well before Trump started trade wars in his first term.
Great interview.
I like the quote: "The problem is not the problem. It is the unwillingness to do what needs to be done, that is the problem. "
As it relates to China, aside from a few savvy legendary investors, many of us in the US are still in the denial and anger phase of the 5 stages of grief (denial, anger, bargaining, depression, and acceptance). We either denigrate China (not really successful, will collapse soon) or are angry (what they did is unfair).
That is no way to win an economic competition with China. We can win economically, but only once we get serious.
Getting serious means, not bad mouthing China, but>
1. Get moral. Make deals that are win win. Keep your contracts. Do not engage in deceptive but legal practices.
2. Go local. Develop your local economy and trade for things you don't have or can't make. Take care of your own citizens first.
3. Stop plundering. Plunder based wealth is in the long run a loosing game. Countries that play the game in the long run become poor as they become focused on providing luxuries to a select few, while impoverishing the society as a whole.
In other words, let China do what it is going to do, and instead focus on what your society needs to do for it's long term benefit.
China and Russia only need to wait the US out. The hegemon will collapse from its own internal contradictions. The noise it is making is not from a position of strength but the death spasm of a failed empire.
Great one! Need more like this...
- ""The unstoppable rise of China"". What are you guys smoking ? China has a GIANT debt problem !!!!! When / If the rest of the world slows down then China won't be immune / can't detach itself from the rest of the world. Then we will see a repeat of 2008.
- I am curious to see what happens to both Russia and China AFTER the Ukraine war has ended. I am curious to see how then these 2 economies will do (financially). To be honest, I am not (too) optimistic about China.
And how about the US' huge debt problem, in which part is owed to China?
The real take on this is, China is not in competition with other countries, it simply wants to rebuild its honor and find back to its old traditions which it rightly so is quite proud of. Are they wrong in doing so?
You seem to make the mistake that the West often do, that was pointed out in the beginning of this talk that the West thinks China is like themselves, which they are not. China simply wants to improve, not conquer.
- To be able to fight that Ukraine war Russia and (I assume China as well) had to (massively) increase their war production. The question is by how much russian production right now is tied to that war in the Ukraine.
- Currently China is also preparing itself for war (think: extra production)
- Agree, the US has a "debt problem" as well. When / if that "debt problem" is going to cause more "disruptions" in the US then China WILL feel the (Negative) impact of that as well in its economy.
- Agree. China is very likely going to rise compared to the US, relative to the US. But only in comparison / RELATIVE to the US. That could mean that china goes down by say 20% but the US could go down by say 50%. Even then China rises against the US.
- The West doesn't have its own set of financial / economical mechanisms. The financial / economic rules / laws are the same for EACH country on planet Earth. Through its Trade Surplus China is tied at the hips to the rest of the world / the US.
- I am NOT / far from convinced that China has no "Imperial Ambitions" like the US, Britain and Spain had in previous centuries and build their Empires. Similar story for Russia.
- Let's assume that there are only 2 countries in the world, US and China and that China has a Trade Surplus of say $ 100 billion then all of those exports (in this particular case) go to the US. Then the US automatically has a Trade Deficit of $ 100 billion (as well). If / When the US enters a recession or worse then it makes sense that US imports will shrink as well. And - in this case - the chinese Trade Surplus will shrink with the same amount as the US Trade Deficit shrinks. That's how China is tied to hip of economic trends in the US and in the rest of the world.
- China has such a large Trade surplus because it has been surpressing growth of chinese household income.
China has a debt-to-GDP ratio of 290% !!!!!!!
Or watch the following 2 videos with Mr. Pettis' opinion.
https://www.youtube.com/watch?v=XO8o0TO-rfg
https://www.youtube.com/watch?v=WE5VczIFGZA
- The acronym BRICS contains a C and I. These 2 letters stand for China & India. Both countries have a debt-to-GDP ratio of over 60%. The official (!!!) ratio for China is 60% and for India is 80%. So, when they hit the next recession both countries will be hit "right between the eyes" and suffer the consequences as well of these high debt ratios.
- China earns A LOT OF money by exporting A LOT OF stuff to e.g. the US and Europe, making itself vulnerable to the next recession (or worse) in those countries.
- Based on information from the internet the chinese debt-to-GDP ratio is much higher.
- If Mr. Diesen wants to have better information then I would recommend you to ask one Micheal Pettis to be interviewed. https://en.wikipedia.org/wiki/Michael_Pettis. He is also active on Twitter.
- My personal opinion is that the era of "Super Powers" is over. I believe that we will see the rise of multiple "regional powers" instead and I think China and the US will / could be 2 of them. This assumes that these 2 countries each won't fall apart into several smaller states.
- A good comparison is what happened to the rise and fall British and the Roman Empire. As time went by the government in the capitals became weaker and weaker. and ultimately these Empires fell apart. So, it's not unlikely that this is going to happen with e.g the US and China as well.
Chinese have an old saying: those who come up strong fast are likely to fall back with equal suddenness. The organic growth of a country is a slow brewing process, the same as the organic growth of a company. Leverage can buy you some speed, for a while. But the "fundamentals" will recall everything back to the "norm", what the true underlying conditions can support.
If you ignore the political history and social changes in the last 100 years of China, AND if you have focused more on the skyscrapers, the dams, and the machinery that made both possible, then your conclusion would be more or less as discussed in the interview. But if you consider both the fiscal and moral deficits in China, then China has got at best some pieces necessary to make a military power, maybe even a global military power, but China today is still far from ready to make a good country for its own people and for its neighbors. Ask the Koreans and Vietnamese how their countries fared when China was strong historically.
Resource depletion and population growth are two major problems. If you like, the full deck of problems facing China is a miniature snapshot to be faced by the whole world. China has had a hard time solving these problems, and likely the world would as well. China so far has "kicked the can" down the road and borrowed the growth from its future, somewhat similar to the USA. But the balloon had been leaking at the seam well before Trump started trade wars in his first term.
Excellent and insightful interview. Thank you!