Enlightening Charles Hugh Smith piece on China. Also included is a parallel 40-minute video chat between Smith and commentator Gordon Long.
Xi’s Gambit: China at the Crossroads
Hughes approaches Xi’s China through two lenses:
The foundations of the social order:
- Real world resources
- Resource extraction and transportation costs
- Systemic restraints (supply chains, debt service, etc.)
- Political and financial conditions as established at the system’s outset
The engines of China’s growth:
- Mercantilist exports
- Property development
- Infrastructure projects
- Debt
As Smith sees it, China now must upgrade its growth engines in order to maintain the level of social order achieved to date.
AND THAT WILL NOT BE EASY.
Two excerpts from the piece:
- “President Xi must foster (or force) a transition to new more sustainable engines of growth, or China will slide down the path to stagnation and speculative bubbles that pop. Xi must also address another source of systemic fragility, soaring wealth inequality, which diverts the lion’s share of income and wealth to a thin slice of the super-wealthy while the purchasing power of workers’ wages stagnates.”
- “The irony of the rivalry between China and the U.S. is both share the same problems: dependence on systems that no longer improve productivity, soaring wealth inequality, massive malinvestment, skyrocketing systemic fragility, rising costs, unprecedented speculative bubbles and a sclerotic, self-serving parasitic elite that resists much-needed reforms.”
Put differently, it’s the same old song but with a different beat in a more damning RACE TO THE BOTTOM.
Tudor Place 