BIG News from China

BIG News from China

We live in a bizarre news bubble here in the United States right now. Our network news and most of the newspapers are locked in an ideological alliance with a single political party, the Democrats — which created a number of constitutional and electioneering scandals to be under reported — and anything resembling a wart on the Republicans to be over reported – for years on end now.

This repression of information, and distortion of data, even spawned an entire conservative/alternative news channel (Fox) and several radio empires, as well as multiple alternative“Print”venues such as Breitbart, Drudge, etc. The mainstream media went Left, so the Right went alternative. This isn’t fascism, it’s math.

One of the big side effects of all this distortion, and the Internet — was the collapse of newspapers, and of the regular news cycle. Big things can and do happen all over the world now, that receive little notice here at home in the mainstream media, sometimes none, and little critical analysis, mostly none – and most of that analysis, when it does occur, is colored pink, as if the authors all read from the same script, the Democratic party narrative.

If you read any analysis of the article below, it will present this in the framework of the Trump/Xi relationship issue, NK, trade, blah, blah, blah.

That will be a lie told to you by journalists no longer doing their jobs.

This small sounding story below, which will not receive the attention it deserves by our press, and therefore our government, our people, or the rest of the world — is one of the most important to come out of China in years.

Let’s go through it together!

BEIJING (AFP) – Chinese President Xi Jinping has called for an increase in imports and fewer restrictions for foreign investors as Beijing comes under pressure from the US and Europe to provide a more level playing field for companies in the country. Donald Trump has railed against China’s massive trade surplus while the European Union and US companies have complained about a lack of access to the huge market.

On it’s face, this lede is a major statement. Does the communist Xi, currently still purging and arresting opposition (within the CCP) as I write this sentence; really want an “increase in imports and fewer restrictions for foreign investors”? I think he wants some of that, and he knows he needs to say he wants all of it, but the real question is, does he understand what that also means he must accept? I don’t think so. He sees these two reforms as critical to stopping capital flight, something he knows now he cannot control, only encourage or discourage. But imports and capital investments create exposure to western influences the CCP almost universally opposes.

Xi is in a push me, pull me. If he does what he says he will here, he will get fast growth, a consumer economy, and a powerful China. But there will be a second political party, an alternative to the communists, a “B” party if you will.

If Xi stifles this movement, which has existed for decades now, he will not get the rate of growth he wants, and the SOE’s will overwhelm him. This change must be genuine to work, lip service doesn’t move the needle in economics.
Here is Xi again:

Speaking to a Communist Party committee on financial and economic affairs, Xi called for “expanding imports while stabilising exports”, state-run media reported on Tuesday.

China’s leaders trying to transform the economy from a reliance on exports and state investment to one driven by domestic demand, though that has led to a slowdown in growth to 26-year lows.

Xi also said “an open economy” with fewer restrictions to foreign access will serve to “promote balance of payment under the current account”, according to the China Daily.

Interesting reference to his CA balance. Does Xi, a communist, really understand the mystical CA balance formula, one of the secret sauce formula’s only economists specializing in capitalistic trade algorithms really comprehend? If he does, he’s no commie, that’s a front for power. I have suspected for years, after Deng’s reforms, that the elite in China, having been educated abroad, fundamentally understand the superiority of Capitalism as an economic system and not only approve of it theoretically, they use it their in their business and personal lives.

In particular, Capitalism crushes Communism, in every demographic ever tried, by about 2 to 1 on a gdp/pp basis. The same population, anywhere in the world, will produce twice as much wealth, meaning food, clothes, schooling, medicine, etc., as a communist country would over the same time period. That is a fact, which hundreds of examples prove, and none contradict.

Unfortunately for Xi, and all dictators, these elite Chinese people driving the real explosive growth in his economy also understand this whole process is inexorably intertwined with freedom of expression, civil rights, privacy rights, and ultimately the right to pick ones laws and leaders democratically. Back to Xi:

The large US trade deficit with China was a major talking point for Trump during last year’s presidential campaign, when he claimed Beijing had “stolen” millions of jobs from Americans.
He also accused China of manipulating its currency to support its exports — a charge he has dropped since taking office in January.

Here is the obligatory MSM Trump bash, this must take place somewhere in the article AND make him look bad or the article cannot run. China of course, DID manipulate their currency to help exports, for 20 years now running, just as Trump said on the campaign trail — before just RECENTLY reversing that policy. They write this up as Trump dropping the “charge”, not the Chinese changing a long-standing policy. That is purposeful, I assure you. Here is the meat, buried of course:

In his statement on Monday, Xi called for measures to liberalise trade and simplify import procedures while reducing tariffs on certain consumer products.
He stressed keeping the Yuan currency’s value “basically stable at a reasonable and balanced level”, and steadily pushing it “to become an international currency”, Xinhua state news agency reported.

So, Xi is signaling his grand bargain. He will open up some markets, not the critical ones (liberalise), and remove some governmental abuses (simplify) which outright steal and block our products, while simultaneously removing and/or reducing the tariffs, which were designed to block products he couldn’t or didn’t want to outright block the other ways. This is a lot of dancing for Xi, and signals a real desire to move the needle on imports – but why?

The last sentence is why.

…and steadily pushing it “to become an international currency”

Xi cannot achieve that last objective without American help. Hence this crafted announcement and the narrative to follow. Xi’s economy can never grow again like in the past without this currency convertibility problem bring solved, and even the growth he has — is imperiled by the currency trap he is in if this doesn’t happen. Xi wants us to help him make the Yuan fully convertible the world over, to stabilize HIS capital flight problem, and in return, he’s promising things he only half wants to do – and that will not work without political reform, creating a second party at the bare minimum. So why is this big news?

Because it also signals how few alternatives he has to beginning some type of reform based on foreign investment, foreign trade, and foreign ideas as well. Xi must know this position I believe he is taking half-heartedly, has a lot of truth in it. He must partially know this because he has vigorously tried the other way, and the rate of growth expansion, has been collapsing every day he’s been in power. Trump is smart, he can take this Xi outline and put a program in place that achieves all his goals for US jobs, and also has the potential to change China over the long term.

Furthermore, I’m betting that’s exactly what he does.

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About karlspain

20 year Newspaperman. Lifelong Inventor. Wrote 2 books so far, working on more. The Revelation, 1st book, about your brain & the universe, and math. Hooked together! God I trust, America I love, 2nd book, is the biography of Aris Mardirossian, a great man. Also owned a software company, an IT integration company, a gas station and a fuzzy logic software title along the way.
This entry was posted in China, China vs U.S., Chinese Economy, Constitution, Constitutional Democracy, Journalism Ethics, Karl Spain, Rex Tillerson, Trump, Uncategorized, Xi. Bookmark the permalink.

2 Responses to BIG News from China

  1. agelesmd says:

    We predicted that China would very likely have a civil war of unknown depth and breadth to enact the unavoidable transition to a more democratic form of government by 2025. You still holding to that time line?

    • karlspain says:

      Trump’s response and it’s success or not, do not change the base gas cloud forces driving this equation in China. But Xi’s purge does, I believe it reinforces the imperative for change. 2025 seems arbitrary to me, these things require more of a free will trigger, which is harder to pinpoint in time.

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