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Comment by veqq | Hacker News Reader

These currency reserves largely represent loans China issued abroad, which have been paid off (or are in the process of being served). Similar to Eurodollars in the past yielding outsized interest rates, increasing demand and thus dollar outflows, this shows a (perhaps?) unrecognized accumulation in China, which may very well either allow them to essentially print their own dollars or mean that they already have been, synthetically.

The article has an interesting premise, calling it a problem for China to have cash - because China is an adversary. I've not seen this stated so explicitly in normal business news before. Warning of the potential for it to be invested abroad in the B&R initiative really shows that the US is gearing up for great power competition again.

N.b. Brad Setser is perhaps the most insightful expert on debt and international monetary flows. He often speaks about African refinancing deals - or why they're nearly impossible to refinance, due to insane complexity.

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I mean it's the gigantic elephant in the room. The reported narratives have aligned over the years as if they were our enemy.

Here are some:

Economically, they're an adversary; they undercut western manufacturing and all our manufacturing went there. They manipulate their currency. They interfere with foreign owned businesses. They steal IP. They're seeking to upset the global money standard. They entrap other nations with predatory loans for infrastructure. They trade with our other enemies and flaunt sanctions, etc, etc.

Ethically, they're our adversary: They use (basically) slave labor, unethical materials (e.g. live plucking), environmentally damaging materials (e.g. banned CFCs), they happily pollute the earth as if tomorrow isn't a concern. They are scraping the ocean clean to feed their people. They oppress their citizens, they operate a crude faux-democracy, they have embarked on an extremely damaging zero covid approach long after it ceased to be relevant to save face for creating it, etc, etc.

Politically, they're our adversary, insulting foreign politicians, trying to annexe land and sea that definitively isn't theirs (Tibet, "South China" Sea), engaging in brinksmanship to force the issue, etc.

These are all things from media stories that I can think of from the top of my head. Not exactly representation as a best friend.

> They manipulate their currency. They interfere with foreign owned businesses. They steal IP. They're seeking to upset the global money standard. They entrap other nations with predatory loans for infrastructure. They trade with our other enemies and flaunt sanctions, etc, etc.

Aside from the money standard and zero COVID bits, every part of this is true of the US. This conflict just boils down to “the hegemon doesn’t want any competition.”

> they undercut western manufacturing and all our manufacturing went there.

America’s oligarchs did this to the country. China just leveraged their short-sightedness and greed to the country’s own advantage.

Can you provide the examples for US part in pervasive IP stealing, predatory infrastructure loans, trading with sanctioned countries? Not single issues (every country will have some examples here and there), but actually using those as long term strategies?

Huh? The US sets the sanctions.

We’ve changed our laws to legalize corruption and subsidize export of key industries. Steel is hardly made in Cleveland and Pittsburgh anymore for a simple reason: our tax and regulatory structure was reformed, and makes it more profitable to ship that business to China or Mexico.

Correct. But that doesn't support any of the claims I mentioned from bugglebeetle's comment.

To be fair, the US doesn't trade with sanctioned states because they (and the UK) are among the first to sanction other states. The EU just follows. Did China sanction any other states? Maybe Lithuania for opening a Taiwan representation office. But it's not sanctions, it's more like bullying.

China has sanctioned Lithuania for opening a Taiwan representative office, like you said.

Recently, they've also sanctioned Australia after the Australian government requested an independent investigation into the origins of the virus. This escalated into a one-sided trade war, particularly targeting Australian barley, wine and iron/steel exports.

As well as Norway, in 2010, after the independent Norwegian Nobel committee granted the Nobel Peace Prize to jailed Chinese human rights activist Liu Xiaobo.

Just curious, if China sanctions the UK, would the US stop trading with the UK?

What is your opinion?

Why would they? The US doesn't care about who China sanctions, and the UK is one of US's closest allies.

Ok, just wanted to be clear.

Look into earlier in the Industrial Revolution and you'll find plenty of IP thefts and outright defiance of UK laws of technology export controls and laws against emigration of skilled workers. The US went further than "being a fence" and had agents stealing technology as early as 1787. It isn't limited to industrial technology. Music piracy got so bad in the 19th century that Gilbert and Sullivan premiered "The Pirates of Penzance" in New York first to stop the issues of rampant unauthorized productions seen by "HMS Pinafore". When they were the underdog the US could politely be described as "guilty as sin".

I offer this more for the sake of enlightenment and amusement than anything else.

(Agreed)

Those interested might want to look at this as well: https://creativelawcenter.com/dickens-american-copyright

Trading with sanctioned countries: happens all the time in support of various US wars. Too many examples during the Iraq War, but Iran Contra Scandal is a big one as the US President was directly involved.

Predatory infrastructure loans: that's what USAID, IMF and World Bank are basically set up to do.

There’s Samuel Slater (the traitor). https://en.m.wikipedia.org/wiki/Samuel_Slater

He was the most spectacular but hardly an isolated case. https://hbswk.hbs.edu/archive/trade-secrets-intellectual-pir...

The problem is that a single-party propagandist republic is effectively a separate type of government than a representative republic and makes it harder to distinguish the will of the population.

The policies could be hidden from the vast majority of informed public opinion in a way Western conspiracists or whataboutists alike can only dream is really correspondent or directly analogous to mainstream media manipulation.

It can still be true that China’s no one’s enemy except that the Party is everyone’s enemy (while the Chinese population will be the last ones to realize it).

Pretty similar to the US. We don’t really have true representism. We just have two parties instead of one, but I’d wager the wills and wants of the ruling elite are just as far removed from the true wills and wants of the populace as they are in china.

> The narratives have aligned over the years as if they were our enemy.

We've been narrated to over the years that they are our enemies, yes.

> They use (basically) slave labor, unethical materials (e.g. live plucking), environmentally damaging materials (e.g. banned CFCs), they happily pollute the earth as if tomorrow isn't a concern.

Why is this all of a sudden a problem when China does it, but not when our firms do this in their off-shore sweatshops and subsidiaries and mining and agricultural interests?

It sounds like all of these things aren't a problem, it's that we aren't profiting from them that's the problem.

Ethically, they are our enemies in the same scope that our multi-nationals are our enemies. They too are incompatible with human rights and democracy.

> Why is this all of a sudden a problem when China does it, but not when our firms do this in their off-shore sweatshops

It's certainly a problem! But the only thing we can really do about it is pass laws.

> It's certainly a problem!

If it were a problem, Washington could get it resolved in a year.

It's not a problem, because half the people bankrolling political campaigns are neck-deep in it! Their businesses are built on it! On cheap labour, on captive markets, on sources of third-world resources that are accessed through theft, violence, or corruption!

And even if you aren't directly involved, our society will not function very well if we stop reaping the benefits of all the practices I've described. Nobody wants to pay $90 for a t-shirt, or $9 for a gallon of gas.

I see two kinds of people saying either:

1. The west is doing immoral things and hiding it. Let's talk about it and force people in charge to change things or change the people in charge!

Or:

2. The west is doing immoral things. Let's root for these other guys who are also doing immoral things; eventually they will replace the west and then somebody will figure out how to stop them from doing the immoral things.

I think (2) is predicated on the fact that the west wrong doings are so old and irreparable and so they can be only washed away through a complete blank slate rewrite of the geopolitical order.

I think this is a relatively "natural" effect of our human psychology. We have an innate sense of "punishing" people and we often find ways to rationalize and explain why they should be punished. However these instincts are ill suited to handle geopolitics because there are many more people involved that the "tribe" size of our natural selection environment and also because the time scale of the changes is usually much longer than what people are used to in their day to day relationships.

I think logic (2) is flawed because once the new power structure is formed it will be hard to change exactly like (1) or even worse. Furthermore it will have done immoral things for quite some time by then because changes to geopolitical power balances will take a long time to actuate and thus they new power will also become "irreparable" and the only thing left to do will be to root for the next "underdog".

3) west has done and continues to do things they deem immoral to stay ahead while use propaganda and coercion against others when they do the same things to catch up. Folks who fall for their own propaganda and clash with those that don't.

I don't think that's different from what I said in (1):

"The west is doing immoral things and hiding it"

The propaganda aspect you're mentioning is an integral part of "hiding it".

I don't think you're framing changes the options on the table: either you try to fix the system from within our you somehow hope that the others will be better just because.

IMO third framing is west is weaponizing/moralizing development tactics when "immoral" methods are simply effective development methods that west doesn't want their competitors to adopt. The TLDR is there isn't anything to fix per say, sometimes developing fast and catching up to incumbants takes breaking a lot of eggs. The eggs are of course humans, and it's tempting to build propaganda atrocity narratives to deter such behaviour. Frequently it even comes from a genuine place, hence many useful idiots who drink the koolaid can advocate for it strongly, but these narratives are ultimately, on a geostrategic level, self serving for entrenched interests/winners who wants to stay on top. The logic of (3) is recognizing that the liberal world/rule-based-order is a rigged game, and it's in the understandable self-interest that others don't want to play in an already unfair system.

Thanks, I think this is a very astute analysis

No point engaging with the points, I was simply recounting anti-chinese narratives that western media has produced over time. The point is that the overwhelming amount of press they get is negative or at best neutral. They're treated like enemies in the media. politicians use anti-china talking points routinely. The average westerner is unlikely to regard them positively. I wouldn't call this friendship.

The biggest adversary of the United States is the United States.

Those factories migrated to the US South, then to Mexico, then to China. Not because of some conspiracy, but because we run our institutions based on quarterly financials.

I worked a long time ago on an effort to sue a large manufacturer whose supply chain was shipping counterfeit parts to certain customers. The Chinese partners ran a third shift with no QC and stuffed these parts into the distribution chain. They also stole defective parts and did the same thing. Everyone knew this was happening. But everyone was making money, so nobody gave a shit.

With respect to politics, well yeah, they are the other great power now. It’s in their interest to buffer themselves from whatever they perceive as a threat. The US is no babe in the woods here - our war plan from the 1950s onward was to attack China with nuclear weapons if the Soviets rolled into East Berlin - just in case.

The Chinese can’t compete with the US with air or sea power, so they seek to control their sphere of influence in other ways, and slowly build in preparation for the US decline in power.

I agree. The US (and other western countries) have let themselves fall victim to all sorts of corrupt ideologies; this has created short term 'limited liability' reward structures which have encouraged a short term mindset. Instead of focusing on fixing internal issues, the US decided to run their economy on the misery of others by starting wars in faraway lands, manipulating foreign governments, saddling them with debts to create artificial demand for USD to export inflation, then they monopolized 'the internet' with their own government-anointed big tech monopolies. Zero focus on creating real, profitable, value-adding businesses. Zero ethics.

China won this round fair and square... The smartest thing the west can do from now on is dump fiat currencies, switch to crypto and leave China holding the paper, but the longer the west fails to acknowledge that China beat it at its own game, the further it will fall.

> The smartest thing the west can do from now on is dump fiat currencies, switch to crypto

Seriously? WTF?

Wait a minute, you don't want to make jongjong's speculative crypto investments bear fruit so that he can retire in the Caribbean?

I mean he's gotta be an excellent mental gynmast to speak about real, profitable, value-adding businesses and crypto in the same post.

Radical, but the alternative is to honor all the currency paper China now holds. As someone who had no say over any of this, I don't see why I should play this game if I must join the losing side.

> Radical, but the alternative is to honor all the currency paper China now holds.

As if China is the only country that holds US paper. This sort of idea is what could very well start WWIII.

That's why it's a good idea to live outside any major capital city.

Crypto isn't possible with todays tech, because it's an ever increasing bug bounty program that's super slow and has no undo button for fraud (which the elderly are extremely susceptible to).

You could say the same about people having the ability to make wire transfers or international transfers. They're largely irreversible after some period. Every kind transaction becomes irreversible eventually.

No one has solved the elderly exploitation problem yet for the existing banking system. Not sure why it would be fair to hold crypto to a higher standard.

This is why we can’t have good things!

> then [the US and other western countries] monopolized 'the internet' with their own government-anointed unprofitable big tech monopolies

How did the government anoint Microsoft, Apple, Google, and Facebook?

The problem with the quarterly profit motive is that it's not voluntary for the US electorate.

If Americans could vote on their preferred time intervals to manage towards, they wouldn't pick quarterly. Quarterly screws the overwhelming majority of people who care about the future.But it's not up for discussion, debate or the political process.

It's similar to US foreign military aid. Nothing anyone says or does will change it. Whoever or whatever controls it is beyond the reach of the political process, at least the part that 99% of people can participate in.

People treat quarterly myopia like an emergent phenomenon, like it's some kind of maximum that the country naturally converged upon. Except there's nothing natural about it, and it only benefits a small number of unaccountable people.

I think this is an issue of perspective.

I know someone who quite recently died of Covid. There is no longer a pandemic, but the virus is still deadly. Their concern is justified.

Economically, the US is critically dependent on China for facilitating consumer demand. The US cannot afford an adversary in China.

Ethically, the US is not offering a compelling framework or alternative that alleviates the issues you raise. This is a real concern.

China has lifted hundreds of millions of people directly out of extreme poverty. This is their prerogative and modus operandi.

The only way forward is cooperation, adjustment and coordination.

If the CCP were so concerned with COVID why did they have a victory concert in August 2020[1]? Obviously the virus is still deadly, but it seems at least inconsistent for CCP COVID policy to be “we did it!” in August 2020, then lock downs in 2022.

Regarding “lifting people out of poverty”, did hundreds of millions of people’s hard work have anything to do with lifting _themselves_ out of poverty or does the CCP get all the credit? If CCP gets the credit, there was certainly a lot of “trial and error” before they got it right. Was it worth the lives of 30 million people?

[1]: https://www.businessinsider.com/wuhans-mask-less-pool-party-...

I can understand this being hard to comprehend, but if China actually effectively deployed a zero covid policy initially - it's up to you whether you think the reports to this effect are true or not - then a mask-less concert is in fact pretty safe as long as you're not allowing foreigners to bring COVID into the country.

Of course the moment you let Americans in to your country, you've given up your battle against COVID since we decided to just let it rip.

China's not the only country that tried a zero COVID policy and for a while it was working in other places too thanks to management techniques, travel restrictions, quarantines, etc. (New Zealand is one, iirc) But when one of the biggest and most powerful countries in the world decides to just give up on the fight nobody else is going to win.

COVID wasn't anywhere close to just let rip in the US. There's an argument that happened late on in some very Trumpian districts, hence the wards full of dying vaccine deniers late in the pandemic, but overall the difference between COVID policies in Democrat and Republican regions was marginal. Both sides screamed to high heaven about every single wrinkle in policy like it was existential, but they all locked down.

> if China actually effectively deployed a zero covid policy initially - it's up to you whether you think the reports to this effect are true or not - then a mask-less concert is in fact pretty safe as long as you're not allowing foreigners to bring COVID into the country.

I mean it is not actually a matter of belief. We know how infectious COVID was, and we know life in China pretty much resumed as normal by August 2020, except for hard lockdowns wherever a case popped up. You cannot hide exponential growth of infections, it is simply impossible.

'Let it rip' is 'flatten the curve' for someone who unscientifically thinks zero Covid is practically possible.

China made the wrong decision and almost sparked an internal collapse. They lost the youth and the hopelessness in the country is palpable.

Where in China do you live?

How is thinking zero covid is possible in 2020 "unscientific"?

Did anyone try and fail at that point? Were there experiments that tried to achieve zero covid, exhausted all practical methods and still failed?

I'd argue that even today, zero covid is not "scientifically" proven practically impossible. The fact that China tried and failed does not mean it's inherently practically impossible. For all I can tell, it's only "practically impossible" because only China was able to pull off the authoritarian measures to suppress the spread of the virus. In a more authoritarian world, we might have been able to eradicate covid. Does your "science" include a deep discourse in political systems?

It was impossible after we learned a few things:

-R0 was quite high

-Animals can hold and spread the virus, so even after vaccinations of humans it was going to be in the background

-not every country was trying for zero Covid, therefore at some point in the future if you ever hope to have an open border with a country that has open borders with that country, you get it eventually.

-there are no 100% secure borders

> trying to annexe land and sea that definitively isn't theirs (Tibet, "South China" Sea)

The matter of Tibet is complex, and I think "definitively" is handwaving away a lot of Tibetan history.

In 1991, when Soviet Union collapsed and some parts of it had finally a lucky chance to go their own way, there was a lot of western "experts" who lectured new countries how complex their past was, how Soviet past should be also respected and shouldn't be handwaved away etc. It actually continued decades until very recently – Bucha happened.

I quite like how the average American looks at China (not always fairly by the way - some of what you accuse China of doing is actually illegal in China) while being completely unable to hold a mirror to how their own economy works. It’s kind of entertaining to see a bully complains that there now is another bully in town.

>"bully complains that there now is another bully in town."

I think yours is the best reply to the post that reads more like a tantrum.

> Economically, they're an adversary; they undercut western manufacturing and all our manufacturing went there.

Wow, you make it sound like it was some devious Chinese plan where they intentionally made their people work for American manufacturers and lured them in with bribes.

The reality was that American corporations willingly went over to China because number must go up and paying their own people living factory wages wasn’t cutting it.

So tired of this stance - “China did it to us!”

America did it to itself.

> America did it to itself.

Corporations outsourced manufacturing to China, because American corporations are independent from the US government and profit-motivated.

If a corporation is HQed in and operated out of America, and diverts the bulk of its profits to American citizens, it is reasonable to say that "America did it to itself".

American citizens could have voted with their wallets, and they could have voted at the booths to elect governments that would regulate the flow of American jobs overseas. But they didn't, and so here we are.

I think it's important to draw distinctions as to the entity with authority to make a change.

In the Chinese system, that's the market but always capped by political and CCP decisions, if they deign to care.

In the American system, that's resolutely only the market. The government has some limited second order control (tariffs, industrial policy, national security exclusions), but generally didn't use them against China 1990-2018.

Ergo, the deciders moving manufacturing to China were the CEOs of American companies, optimizing their own production costs.

I'd be curious to see an analysis of the rise of Walmart (and immolation of Sears) and later Target vis-a-vis Chinese manufacturing of consumer goods sold in America. I'd be surprised if the centralization of point-of-sale (vs previous more diverse and independent stores) didn't incentivize bulk, low-cost offshore manufacturing via volume.

America is absolutely capable of setting tariffs on imports that would have made that unprofitable. In fact, that policy has been the norm at many times in countries precisely to protect domestic industry.

So it's really more accurate to say that America chose to allow it to be profitable for corporations to outsource. Government policy could easily have been the opposite. So ultimately, America did do it to itself.

(BTW I'm not arguing this would have necessarily been good policy. Just that it is very much an explicit governmental decision.)

this seems to misunderstand what tarrifs actually do. It's the US companies that pay the tarrifs. The concept of 'if we increase the tarrifs, US manufacturing will come back".

That's not how the world works. It takes years to switch a manufacturer depending on terms, who owns the molds, etc.

Placing tarrifs on China hurts American consumers. Instead, there should be tax incentives for producing stateside.

I'm not arguing whether tarriffs are good or bad, but the absolutely do work.

> It's the US companies that pay the tarrifs.

No, customers pay the tarriffs at the end of the day. Companies raise the prices of imported goods to cover the tarriffs, and tarriffs in this case are set so that the final retail price of imported goods matches (or exceeds) the domestic manufacturing price.

> The concept of 'if we increase the tarrifs, US manufacturing will come back"... It takes years...

The idea is generally to have tarriffs from the beginning so manufacturing never leaves. Because you're right, otherwise it does take years.

> Placing tarrifs on China hurts American consumers. Instead, there should be tax incentives for producing stateside.

There's no difference, they harm consumers equally. Corporate tax incentives mean reduced government income which needs to be made up for with... higher personal taxes. Or higher corporate taxes in other sectors which lead to higher prices. No matter what, the consumer is paying.

Tarriffs or tax incentives have the same effect, but tax incentives are usually much more difficult to design and limit corporate flexibility in bad ways that are hard to foresee. Tarriffs have much more reliable enforcement and predictable effects.

>No, customers pay the tarriffs at the end of the day.

This depends on the product and the type of demand. If it's inelastic, yes. if it's consumer focused, yes. But most of the time that's not the case. Tarrifs on material exports ar b2b, where pricing agreements are common.

At the end of the day, tarrifs create downward pressure on companies profit margins. If you instead, gave incentives it would put upward pressure on the companies who created fucundity for the economy.

yea corporations that are staunchly independent until the next recession where they beg for government handouts because they are too important to fail

We weren't smart enough to solve the tragedy of the commons situation because we believed a wealthy China would drop the true-believer Mao ideology.

They did drop maoism. China practices state run capitalism now.

If that was true they wouldn't have own-goaled their own tech sector.

Xi has been talking about returning to Marxism, which I presume means not Maoism and not Dengism.

Most people on HN basically have no idea what Marxism is, what the road to socialism is about, the stages of socialism, or why China really does what they do. I don't watch Xi's speeches on YouTube, but you could if you really wanted to.

They treat "not free market capitalism" as a monolith of ideas and states.

Even a light reading of Marxist economic theory with some other adjacent authors like Lenin, Mao, Trotsky, etc. would make clear exactly why Dengism was needed and why it worked and why Xi finds it necessary to return to straight Marxism.

The worst part is how greedy corporate oligarchs of the US sent all the jobs to China. That made Dengism work really well.

I mean, I don't really know what to say. If you wanted China to lose or not be Marxist, the US did a really bad job. It's really clear the only long-term planning the US does is lining pockets and that's probably going to be the death of the country.

But this is HN, so please pretend like I was complaining about wokeness or whatever other imaginary problem is popular here.

> undercut western manufacturing and all our manufacturing went there.

Notice that western itself is a collective of nation but all hell breaks lose if non western got manufacturing am I rite?

Having said that be thankful for ultra scaling up manufacturing in East Asia. Appliances and electronic prices keeps falling. Compare that to services or "western" exclusive manufacturing like vehicles, getting inflated like crazy.

So they do… basically all the things that the West used to do over the last few hundred years (some of them far more recently) to get ourselves into the position of economic and political power in the world we are in?

I mean, not to say they aren’t bad but we need to have more acknowledgement of the things our countries did in the past and why they were wrong, and looking to make reparations where possible, and not just hypocritically pretending that we didn’t do them while accusing other emerging powers of the things we did…

> They're seeking to upset the global money standard.

The disturb the global standard, which happens to benefit the US greatly while hurting the rest of the world (especially the global south). Terrible!

> They use (basically) slave labor,

While it is true that China has a lot of manual labor and less worker rights than most western states, China isnt the sweatshop it used to be anymore.

Nearly every "simple" labor intensive industry, like textile industry, has moved to countries like Bangladesh, while strangely no one seems to care about their slave labor.

Also, wasn't the "slave labor" the reason why the US cooperated with China, essentially making them what they are today? [1]

> They manipulate their currency.

How dare they? https://brrr.money

> They entrap other nations with predatory loans for infrastructure.

I could write a book about this but whatcha doin' over there? [2]

> they happily pollute the earth as if tomorrow isn't a concern.

China is ranking 48 in Co2 emissions per capita, the US in ranking 14 (2021) [3]

Also they are investing more into renewable energy than every other country, by far [4]

> They are scraping the ocean clean to feed their people.

China fished 11.7 million metric tons in 2020, the US fished 4.23 million metric tons, China fishes approx. three times as much as the US. [5]

But China has 1.4 billion citizens, while the US has 331 million citizens, so China has over 4 times the citizens.

Also the average Chinese eats 40.3kg of fish every year, while average American eats 22.2kg of fish every year. [6]

So to sum up: China fishes three times as much as the US, while having 4 times the population that eats nearly twice as much fish as a US citizen does.

[1] https://en.wikipedia.org/wiki/Chimerica

[2] https://en.wikipedia.org/wiki/Oil-for-Food_Programme

[3] https://www.dw.com/en/fact-check-is-china-the-main-climate-c...

[4] https://www.scientificamerican.com/article/china-invests-546...

[5] https://www.statista.com/statistics/240225/leading-fishing-n...

[6] https://ourworldindata.org/grapher/fish-and-seafood-consumpt...

Like, great job, but you completely missed the point of the post by addressing the anecdotes. My point was western media prints uniformly negative stories about them and treats them like an enemy. The stories may be true, or not, or fair, or not. It's immaterial. They represent the battle for the hearts and minds of North America.

What a few words can do :D

Then this shall be taken as a counterpoint to the narratives you pointed to :)

Western media prints uniformly negative stories about everyone. So at least in this regard, China is getting equal treatment (news sells; non-news does not sell).

I would rather simply point out that they are after our way of living.

How is this any worse than what Saudi Arabia does, that we overtly consider a US ally?

The same logic could easily apply to every other manufacturing heavy country (Japan, India, etc). There are just as many unethical companies operating in the country (Dupont/Monsato/3M) hit by massive lawsuits. And trying to influence domestic issues in other countries has led to the numerous wars the US have started in modern times, not to mention the annexation of Hawaii because of blatant business interests.

the world is tired of the US finding applying double standards to whoever they want to make their enemy.

> These currency reserves largely represent loans China issued abroad, which have been paid off (or are in the process of being served).

I think you missed a crisis in Africa.

Those loans can hardly be paid off, the interest rates are too high and the borrowed loans Kuch for infrastructure projects aren't leading to any improvements / revenue.

If so, show me which have a net benefit for the country where loans are used to pay off mostly Chinese workers.

Every project by China in Africa seems to have failed and putting those countries in debt ( fyi, those projects which China introduced with big fanfare when announced have literally gone mute, business as usual it seems)

You’re saying that building roads and bridges is not beneficial to countries which deeply lack roads and bridges?

Not when they are built by Chinese companies, using Chinese sourced labour and supplies, and then the locals are taxed / billed to use them which many can't afford to begin with. Not to mention the governments now owing that loan money plus interest, none of which really went into the local economy.

Not arguing against China, nor infrastructure projects, but B&R initiative is very China-centric, with a lot caveats that are often overlooked by short-sighted politicians.

So what do you suggest as a better alternative?

The West has tried and failed with countless “solutions” for more than six decades now, in many places making the situation worse compared to the start of the decolonization process.

Also, road taxes is a measure that it is also heavily promoted by the European Commission in the Eastern European countries where “its” money is now helping build bridges and highways (I live on such an Eastern European country).

Yeah, that's a thing - west just exploited the hell out of many parts of Africa, while not improving most places by any meaningful means, just filling pockets of corrupt local dictators. In fact most places are much worse off than they were 60 years ago.

So don't complain that they are fed up and seek help elsewhere, what west has to offer has been tried many times and results are down there. If they end up indebted to Chinese or US or some EU country like France means little difference to them, all else being equal.

The local dictators hide and bring their money to the west only so it is a lie that the money stays in those countries. Most of it is comes to the west and then these politically exposed people are used by the 3 letter agencies of the west to control the poor countries. For those countries the loans from the West or China don't matter only maybe they can better options if they can play the west and China against each other.

It seems unlikely that omnipotent 3 letter agencies have been the cause of African strife for the last 30 years.

Economics does.

Nigeria, Egypt, and South Africa have decent economies, and they've followed the same path as many other developed countries.

Moving away from agriculture and raw resource extraction, building industry, and then identifying, incubating, scaling, and exporting services.

The fact that other countries in the region haven't done the same, specifically the largest Ethiopia and DRC, has more to do with internal civil wars.

Hopefully recent stability in Ethiopia and engaging additional generation capacity at the Grand Ethiopian Renaissance Dam will kickstart the Ethiopian economy.

(And no, civil wars aren't all started by 3 letter agencies)

I think the major issue in this situation is that the loaned money effectively circulates back into Chinese hands, and all that the local economy gets in return is infrastructure that they will in a few years not be able to maintain or develop due to a lack of skill or resources.

So not only are none of the locals profiting from these projects, but more importantly no one is learning and developing the skills to construct and maintain the new infrastructure and services in the region.

This play by China (even if unintentional) is extremely predatory as it only makes the country more dependant on China.

In an ideal circumstance China would manage these projects while training and developing local talent to help develop the local industries. Only then do I believe would these deals be beneficial for Africa in the long run.

So you might believe these project are improving the local regions at the present, but I would be really interested to hear if you still believe so in 10 years.

This is the 101 debt trap propaganda narrative. Few years ago McKinsey field reports of 1000+ PRC firms across africa and 90% of employees were locals. There's studies back in mid 10s that show 70-80% localization figures across PRC infra export projects. Reality is PRC/BRI localization depends on project timelines - quick ones use more experienced PRC labour, long ones integrate more locals, because at the end of the day there's deadlines to meet and govs/people of underdeveloped countries want better infra fast. PRC supply, local demand, and even corruption mostly align in these deals. And what is even "extremely predatory", of course if they use PRC tech they would become more dependant to PRC supply chains just like they would be dependant on west when using western vendors. The western cope is thinking there's something wrong being dependent on PRC who has established industrial base to deliver and sustain these capital projects cheaper than west. Underdeveloped countries with limited indigenous capabilities have to choose who to be dependant on regardless, and without conflicting geopolitics like in ASEAN, PRC is the easy partner of choice.

lmao if the west really wanted to help Africa or Asia in the name of lifting everyone on the globe out of poverty it would be something like Marshall plan & how EU is integrating the balkans (Marshall plan in todays dollars is like 130 billion :))

I love this condescending and infantilising tone of yours, regarding African governments as some gullible, uneducated bunches of toddlers that anyone can just walk in and take advantage of - as if they weren’t perfectly capable of signing their own deals.

Fitting such casual “Africa dumb” and “China evil” sentiments in one nonchalant comment seems like such a weird specialty of this brainwashing and propaganda that we have going on in the West.

You are the only one saying "Africa Dumb" and "China Evil". How is Africa supposed to maintain and extend roads without the expertise in their local population? Or are you saying they do have this expertise?

Nah.

This is just usury and loan sharking on a global scale.

Substitute Southeast Asia for Africa.

China is pretty much providing payday loans and debt trap diplomacy to poorer countries (149+) in order to consolidate power.

This has nothing to do with sophistication but everything to do with greed.

> regarding African governments as some gullible, uneducated bunches of toddlers

They’re not stupid, they’re corrupt. The elites get a slice of the pie. It’s how development finance has been done for centuries. “Stakeholders” are bought off. The country is left with the bill.

Exactly. And if a ruler’s elite supporters find out he turned down Chinese loans that he could’ve used to give his elite supporters lots of free money, they’ll remove him from power and put someone else in that will take the loan money and pay it out to the elites.

CGPGrey has a great video called ‘Rules for Rulers’ that explains this in depth: https://youtu.be/rStL7niR7gs

> corrupt

To quantify the statement,

https://en.m.wikipedia.org/wiki/Corruption_Perceptions_Index

https://en.m.wikipedia.org/wiki/Global_Corruption_Barometer

I love this condescending and infantilising tone of yours

Fitting such casual “Africa dumb” and “China evil”

None of this happened, you are hallucinating what other people said.

not in the way china builds for export

i can comment on the road projects in Nigeria and Zambia which i have personally seen

over 3-5 years after completion many fell into disrepair and now arent much better than unpaved tracks that they replace ,while the nations gained no road building expertise and are stuck with large loans

The book "the undercover economist" talks about this alot, but how the USA and the world bank did it. Essentially US contractors go to a developing country and say: you need to build infrastructure for your economy to grow and so take out a huge loan to do that, and paying back will be easy because of all the resulting growth. But there are two catches, the first is that it will be US companies doing the work (or at least controlling the money), and they will vastly over-estimate the growth and hence the required infra-structure (to maximize profits of course). Country agrees, sometimes knowing full well about how its corrupt but they get a slice so who cares, and boom. You get profits for private USA companies and unpayable debts for the country. Bonus is when the debts default the loan-provider can take ownership of whatever was very valuable in the country be it nationalized industries or natural resources.

The fact that China could or would do the exact same thing in Africa is a no-brainer because of course they are.

This is also the topic of the book Confessions of an Economic Hitman.

Yes, that's the one I actually meant, thank you. I can't edit my original now but this is book I was referring to.

Correct.

Building roads to nowhere, airports that are almost not used, ports and trains that aren't used aren't beneficial. It could be usefull if a minimal of due diligence was done though, but there hasn't as far as I'm aware.

Additionally, when the local people are not hired as workers, but Chinese people are. The value of infrastructure projects and funneling back money to the local workers is greatly deminished.

Instead, infrastructure money goes straight back to the Chinese ( instead of the locals), while the country itselve has to pay the money back to the Chinese.

So China passes by the cash register 2 times.

> I think you missed a crisis in Africa.

You'll find that I specifically mentioned Setser's treatments of of African refinancing attempts. Either way, Chinese loans to Africa make up a very small portion of Chinese activity. If you're talking about debt trap diplomacy, well... Chinese loans to Africa also make up a small portion of African debt. Eric Olander and Cobus van Staden discuss this a lot.

> Similar to Eurodollars in the past yielding outsized interest rates, increasing demand and thus dollar outflows

Genuinely curious, do you happen to have a link about that? When did it happen? The ‘70s, the ‘80s? I’m on my (small-screen) phone and I’m also a little lazy to try and search for it right now.

More generally, I feel that the outside investments that bring in lots of money for those involved is not a topic that has been given too much attention, all the focus is on stuff such as trade deficits and the like.

The British Empire managed to partially thrive on that kind of investment philosophy for much of the 19th century, the French, too, from a certain point on (even though 1917 and the Bolsheviks getting to power did them a good one).

I suspect the same thing has been happening to the US for a long time now (from just after WW2? I couldn’t tell), they’re not balancing their trade deficits based on “money printing” alone.

> Genuinely curious, do you happen to have a link about that? When did it happen? The ‘70s, the ‘80s?

There was a recent Odd Lots podcast on the genesis of the Eurodollar market.

https://www.bloomberg.com/news/articles/2023-06-19/josh-youn...

Or, if you prefer video or don't pay for Bloomberg:

https://www.youtube.com/watch?v=-0EN8_WuvK8

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