Perhaps the whole string of stock markets around the globe that topped out in 2018 were trying to tell us something. From Michael Snyder at theeconomiccollapseblog.com:
We continue to get more confirmation that the global economy is slowing down substantially. On Monday, it was China’s turn to surprise analysts, and the numbers that they just released are absolutely stunning. When Chinese imports and exports are both expanding, that is a clear sign that the global economy is running on all cylinders, but when both of them are contracting that is an indication that huge trouble is ahead. And the experts were certainly anticipating substantial increases in both categories in December, but instead there were huge declines. There is no possible way to spin these numbers to make them look good…
Data from China showed imports fell 7.6 percent year-on-year in December while analysts had predicted a 5-percent rise. Exports dropped 4.4 percent, confounding expectations for a 3-percent gain.
China now accounts for more total global trade than the United States does, and the fact that the numbers for the global economy’s number one trade hub are falling this dramatically is a major warning sign.
And of course it isn’t just China that is experiencing trouble. In fact, we just witnessed the worst industrial output numbers in Europe “in nearly three years”…
Adding to the gloom were weak industrial output numbers from the euro zone, which showed the largest fall in nearly three years.
Softening demand has been felt around the world, with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple among others.
This is a good analysis of the implications of a rising China. From Robert Kaplan at foreignpolicy.com:
The United States and China will be locked in a contest for decades. But Washington can win if it stays more patient than Beijing.
In June 2005, I published a cover story in the Atlantic, “How We Would Fight China.” I wrote that, “The American military contest with China … will define the twenty-first century. And China will be a more formidable adversary than Russia ever was.” I went on to explain that the wars of the future would be naval, with all of their abstract battle systems, even though dirty counterinsurgency fights were all the rage 14 years ago.
That future has arrived, and it is nothing less than a new cold war: The constant, interminable Chinese computer hacks of American warships’ maintenance records, Pentagon personnel records, and so forth constitute war by other means. This situation will last decades and will only get worse, whatever this or that trade deal is struck between smiling Chinese and American presidents in a photo-op that sends financial markets momentarily skyward. The new cold war is permanent because of a host of factors that generals and strategists understand but that many, especially those in the business and financial community who populate Davos, still prefer to deny. And because the U.S.-China relationship is the world’s most crucial—with many second- and third-order effects—a cold war between the two is becoming the negative organizing principle of geopolitics that markets will just have to price in.
The US government is trying to stifle the technological development of its enemies. From Patrick Lawrence at consortiumnews.com:
Xi Jinping’s state media was strangely quiet about its historic lunar landing, writes Patrick Lawrence in this look at the U.S. effort to maintain primacy over advanced technologies.
When China landed a space probe on the far side of the moon last week, it was a first for humanity. The Chang’e 4 spacecraft touched down on Thursday and then sent a rover to explore and photograph lunar terrain we Earthlings had never before seen. This feat is up there with the U.S. moon landing in 1969. But while the scientists who designed the Chang’e 4 probe were properly proud, China’s state-controlled media buried the story beneath the day’s more mundane news. As one space analyst put it, the silence was deafening.
The New York Timesreported: “Compared with previous missions, however, the reaction to Thursday’s milestones seemed strikingly restrained, both in the country’s state-run news outlets and on social media. On China’s most-watched TV news program early Thursday evening, the landing — declared a success by officials at mission control — was not even one of the four top stories.” (CGTN, China’s state-owned English language TV broadcast geared towards the West, however, ran more than 15 stories about the moon landing between Wednesday, Jan. 2 and Friday, Jan. 4.)
Why would this be? Why would Xi Jinping’s hyper-ambitious China go relatively quiet after demonstrating that its swiftly developing technological capabilities are making the nation the global leader its president thinks it is destined to be?
China’s got a lot of wood to chop before it can take over the world. From Raúl Ilargi Meijer at theautomaticearth.com:
In the New Year, after a close to the old one that was sort of terrible for our zombie markets, do prepare for a whole lot of stories about China (on top of Brexit and Yellow Vests and many more windmills fighting the Donald). And don’t count on too many positive ones that don’t originate in the country itself. Beijing will especially be full of feel-good tales about a month from now, around Chinese New Year 2019, which is February 5.
And we won’t get an easy and coherent true story, it’ll be bits and pieces stitched together. What will remain is that China did the same we did, just on steroids. It took us 100 years to build our manufacturing capacity, they did it in under 20 (and made ours obsolete). It took us 100 years to borrow enough to get a debt-to-GDP ratio of 300%, they did it in 10.
In the process they also accumulated 10 times more non-productive assets than us, idle factories, bridges to nowhere and empty cities, but they thought that would be alright, that demand would catch up with supply. And if you look at how much unproductive stuff we ourselves have gathered around us, who can blame them for thinking that? Perhaps their biggest mistake has been misreading our actual wealth situation; they didn’t see how poorly off we really are.
Xiang Songzuo, “a relatively obscure economics professor at Renmin University in Beijing”, expressed some dire warnings about the Chinese economy in a December 15 speech. He didn’t get much attention, not even in the West. Not overly surprising, since both Beijing and Wall Street have a vested interest in the continuing China growth story.
The Malaysian investment fund scandal gets stinkier and stinkier. From Tyler Durden at zerohedge.com:
In the waning months of his administration, Malaysian Prime Minister Najib Razak was desperate to stave off the bankruptcy of1MDB, the sovereign wealth fund that Razak and members of his inner circle looted (allegedly with the help of Goldman Sachs). So, he turned to an unlikely source of funding to bail out the fund – signing away rights to some of his country’s most valuable resources in the process.
The source? China. Employing financier Jho Low as an intermediary, Razak worked out an arrangement with the Chinese government whereby Razak’s government would grant state-owned Chinese enterprises lucrative stakes in Malaysian railway and pipelines projects in exchange for $34 billion – more than enough to clear the shortfall in 1MDB, and then some.
By 2016, Mr. Najib was in a bind because the fund had borrowed $13 billion it couldn’t repay. He turned to Jho Low—a Malaysian financier the U.S. Justice Department has alleged was the mastermind of a multibillion-dollar theft of 1MDB funds—to negotiate with China to resolve the crisis, according to current and former Malaysian officials.
According to a report in the Wall Street Journal, Razak offered the Chinese an invaluable cherry on top of the sweetheart deal. Permission to dock Chinese Navy ships in two Malaysian ports – a “significant concession” that would push Malaysia undeniably into the orbit of Beijing.
Mr. Najib also embarked on secret talks with China’s leadership to let Chinese navy ships dock at two Malaysian ports, say two people familiar with the discussions. Such permission would have been a significant concession to Beijing, which seeks greater influence across contested waters of the South China Sea, but it didn’t come to pass.
I spent a week in China last month, dealing with a drone company whose drones are far superior to anything American companies produce. Here’s news to those who say the Chinese can only copy. By definition you cannot copy something if what your building is better. The Chinese have the largest share of the drone market, by virtue of cutting edge technology. I was in Suzhou, which has 10 million people. It’s next to Shanghai, which has 24 million people. In my week in China, I didn’t see one fat person. Maybe a few pounds overweight, but they’d be considered normal, not even obese, here in the US. Everywhere I went, people were working, working, working. The US underestimates China at its peril. From Fred Reed at theburningplatform.com:
One often sees the silly assertion by right-wing extremists that feminists, social justice warriors, and other “cranks” are enstupidating American education. The purpose. according to these fascists, who are just like Hitler, is “to make historically incompetent groups look competent.” The racism in these absurd claims is obvious. In particular such Neo-Nazis say that mathematical education is being destroyed to benefit “retards.” This “dumbing down,” they say, will hand the future to China.
This is conservative drivel. Nothing suggests that China is gaining on the US in science and technology, except the evidence, and this can be ignored. It is particularly important to keep in mind that the Chinese cannot innovate, only copy American technology.
China grants loans to African companies and if they default, China grabs the infrastructure. That’s a strategy Western countries and governments have been employing for decades. From Tyler Durden at zerohedge.com:
Back in 1885, to much fanfare, the General Act of the Berlin Conference launched the Scramble for Africa which saw the partition of the continent, formerly a loose aggregation of various tribes, into the countries that currently make up the southern continent, by the dominant superpowers (all of them European) of the day. Subsequently Africa was pillaged, plundered, and in most places, left for dead. The fact that a credit system reliant on petrodollars never managed to take hold only precipitated the “developed world” disappointment with Africa, no matter what various enlightened, humanitarian singer/writer/poet/visionaries claimed otherwise.
And so the continent languished…. until 2012 when what we then dubbed as the “Beijing Conference” quietly took place, and to which only Goldman Sachs, which too has been quietly but very aggressively expanding in Africa, was invited.
As the map below, which we first showed in 2012, in just two years after 2010 China had pledged over $100 billion to develop commercial projects in Africa, a period in which the continent had effectively become de facto Chinese province, unchallenged by any developed nation which in the aftermath of the financial crisis had enough chaos at home to bother with what China may be doing in Africa.
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