Comment by ggm | Hacker News Reader

Comment by ggm | Hacker News Reader

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I certainly don't disgagree that Xi won't back down soon, nor will Trump. Nor that global trade will continue: When China and Australia entered a dispute, Australia found substitutable markets for most of its sectors exporting in bulk to China, and in the end they came to rational terms quietly. We all feel much better about the diversified markets now. And in like sense while the whole US beef thing is very annoying it's actually under 10% of our total beef exports.

But I think you underplay how much damage the US could do to the Chinese economy, if (for instance) they repudiated the debt. Or, if they heavy trading partners to drop favourable trade terms to gain back US markets. I think people would be insane to give in but from time to time this kind of thing happens for a short term win. We recently pumped a shitload-and-a-half of money back into the pacrim island economies, to displace China as a trade and security partner having taken our eye off the "backyard" as it is disparagingly called.

China has ~1.4B people and will. They lead in 37 of 44 of advanced technologies. They are already a manufacturer to the world not only for low value goods, but also high tech goods. They are the largest buyer of industrial robotics, they have ~540GW of annual solar PV manufacturing capacity (through the entire vertical), and they account for almost 60% of global EV production. They are erecting twice as much wind and solar capacity as every other country combined. The US has ~340M people and offshored anything that isn't financial services, tech, etc. The US has lost the will to build, and only started to recover it under enormous effort (Inflation Reduction Act). There will be blood. I'm not underplaying the damage the US could do to China via trade restrictions, but rather saying whatever the US does, China will not only survive it, they will lean even harder into whatever they believe will lead to their definition of success.

As Xi would say, "Eat bitterness" (a Chinese idiom signifying enduring hardship and suffering without complaint, often seen as a virtue of perseverance and resilience). Can Americans endure hardship incurred by a brutal global trade war? If so, for how long? Such a natural experiment is about to occur, which is interesting, exciting, and terrifying simultaneously.

Xi Jinping calls on young Chinese to embrace hardship - https://www.thinkchina.sg/society/xi-jinping-calls-young-chi... - June 16th, 2023

'We don't care!' Victor Gao dismisses US market threats after Vance's 'peasants' remark [video] - https://www.youtube.com/watch?v=eb6Ms_SqWtY

"We don't care. China has been here for 5,000 years. Most of the time there was no United States, and we survived. And we expect to survive for another 5,000 years."

Could you provide more information on what you mean by "repudiated the debt"? Does this mean reneging on US Treasury bonds? Because that's nuclear. That causes fixed income markets to implode and brings upon GFC 2.0.

It's implicit in the Mar a Lago model: They will tell debt holders to re-negotiate to longer term debt instruments on low interest or risk losing their money de-facto by being put on some (soverign risk incurring, true) other path which pays out worse for them as the debt holder.

The risk of losing their profit is what I meant by repudiating the debt.

Chinese investor interests hold ~ $800b of debt. Thats not the state, but it is doubtful the state would bail them out: They pick and chose how to fix problems like this and I think the message "You invested in America not us, you wear the risk" would be beneficial to them.

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