Hacker News Reader

Comment by narrator | Hacker News Reader

The biggest surprise of the 21st century is that the Internet and massive outsourcing did not turn China into a country with policy acceptable to western powers.

The other comperable surprise is that massive debt fueled growth in China did not lead to a collapse and bailout by western powers.

The next surprise will be the complete substitution of the entire commercial and financial infrastructure of the world by Chinese institutions. Check out CIPS (alternative to SWIFT) or UnionPay (alternative to VISA/Mastercard networks), Asian Infrastructure Inxvestment Bank (alternative to wold bank), and of course the Shanghai Cooperation Organization (alternative to NATO), and the Shanghai Gold Fix (alternative to Comex and London Gold Fix).

Some are even saying the Chinese have got a new global currency in the works that's not the SDR or the dollar. However, I really doubt that is going to happen, at least in the next few years.

View on HN

At this point China's debt bubble is too large to have a "bailout" from the West. China will have to do it on their own. The ratio of debt growth to GDP growth looks pretty grim as of 2016. Without having experienced an economic correction in such a long time it is possible even many of the companies which appear strong, innovative, and important have serious underlying problems which were easily masked by growth.

Japan may be a rough guiding point to China's future path. After the growth miracle ends, a decision has to be made on the debt. Whichever decision is made the debt will be absorbed by someone. Like Japan, China can continue to do amazing things but the consequences of that debt will throttle back future potential, especially if China's economy fails to rebalance and they choose the Japan option (zombie debt.) The greater geographic size, ethnic diversity, and far lower GDP per capita may make it much more difficult for China to pacify the population during a economic disruption.

China matters a lot but drawing a linear line upwards based on previous trends is a big mistake.

I would be careful with any blanket prediction.

China has a lot of question marks, really I think more question marks than at the turn of the century. In addition to the size of the debt mentioned earlier (much of it in state owned corporate enterprises, their often over-bloated nature often cited as a problem in itself), you have a market system that is somewhat undeveloped and subject to excessive government meddling (see China's stock exchanges and managed floating currency), constrained future growth due to future demographics (eg: an aging society with no "demographic dividend", a situation no doubt not helped by the previous one child policy), and problems with pollution and corruption that -- as Chinese society gets richer -- they are starting to get annoyed by more and more.

None of these mean that China is on the road to ruin, of course, and without a doubt China will continue to play a large role in the world economy in the future. However, I do think that how the Chinese government handles some of their financial system decisions will determine whether your prediction on finance infrastructure holds true. At present, I would not consider the Chinese financial system mature or stable enough to overtake Western ones, and I think the Chinese government has to make some hard decisions before that happens.

> The biggest surprise of the 21st century...

The century is only 15 years old. Give it time.

Social revolutions take decades to hatch after the conditions become right, and decades more of "happening" before there is any certainty about what they turned into.

The only thing that was ridiculous was the idea that a country with 1/3 of the world population would stay irrelevant forever. But outside of that, the future is incredibly uncertain.

not 1/3 but 1/5

Reply on news.ycombinator.com