Comment by crdoconnor | Hacker News Reader

Comment by crdoconnor | Hacker News Reader

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The Chinese are not acquiring USD and treasuries so that they can own spendable assets. They are doing so in order to push the value of their currency down, so that their export goods become more competitive.

This is done because while currency fluctuations and inflation can jump and fall hugely overnight, an industrial base takes DECADES to build up and decades to destroy. China is planning for the long term.

If there ever comes a point where the US industrial base has been effectively destroyed and China makes everything, they can stop the treasury buying and start cashing in. Inflation in the US will go NUTS and the US will have to build an industrial base from scratch -- starting essentially in China's position circa 1980. Not a happy place.

China will have lost trillions following this strategy, but the US will effectively stop being a strategic or military threat if it is followed through to its logical conclusion.

Bitcoin is not a godsend to the Chinese government, as it creates a means to let capital exit the country (which they are desperately trying to prevent).

This reminds me of a friend of mine who is Hong Kong born Chinese. I asked him if he wanted to go to a festival, but he said that he couldn't afford it. I knew that he earned quite a lot of money and pay day had just gone by, so I asked him if everything was OK financially.

His answer blew me away. He explained to me that Chinese families don't think like western families. He pays his parents a seriously large percentage of his earnings every month. If he wants to buy a house or a car or anything that has a large ticket price then he, or his siblings just have to ask his parents. They never have to go into debt and debt was very actively discouraged.

When I asked him why he explained to me that they see the extended family as a single unit or entity. Every generation is deeply involved with the next financially. Companies started by the family are seen as very long term investments. Those investments span more than one generation. In other words, he could start a company that is successful by the time his grandchildren take it over.

The idea that I personally would not benefit, but my grandchildren would, was nuts at the time. Now I have children I'm starting to understand this paradigm shift.

This is of course a generalization, but the Chinese appear to be very patient and serious long term investors.

I'm a native Brit but my wife is mainland Chinese. My wife and I have always shared our accounts anyway, and now we're completely plugged in to the family financial system.

It's a little different with us. Her sister has a family in China (Hohhot) and her parents sometimes live with us (for several years at a time) and sometimes over there. Whoever they live with supports them completely, and get their pensions. So the flow is reversed from what you describe, but the basic principle of shared financial resources and support is the same. e.g. My wife's parents own two flats in China and the revenue from them go to the Chinese branch of the family. We all know basically what everyone else earns and the money from the 'apex' of the family tree goes where it makes best sense. In contrast on my English side, every family unit is discrete. My parents helped us with the purchase of our first house, it's not that there's a lack of generosity in any way, but arrangements are on the basis of one-time gifts. The Chinese way is continuous real-time resource management but in service of a very long term view.

This is the most important reason why Chinese family members don't love each other that much. You never know if your relatives are just nice to you or they are after your money. It complicates everything and when things go bad they go really bad.

If managed well it can be great though. My college roommate has a "college sponsorship" program within his extended family which helps pay his tuition.

I've had to think hard before replying to this. I don't think that's fair at all. I would agree that the Chinese put a premium on loyalty, and don't have as much of a culture of open expressions of affection, but that's mostly a matter of appearance and I've seen it break down many times. I'm not down voting you, because I can see how you might think that and in the general for all I know it might even be true, but it doesn't fit with my experiences of my own Chinese family.

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