The horizon is not so far as we can see, but as far as we can imagine

Category: China Page 1 of 12

Why Does The CCP Accomplish Goals Meant To Better China’s People?

Chinese and American flags flying together

When I originally formulated this article it was just “Why does the CCP accomplish its goals?”

But that’s a stupid article. Certainly there are governments which fail to accomplish their goals, in countries which lacks state capacity or are in constrained positions. But for most of my life most Western governments haven’t been all that constrained, they just acted as if they were.

The truth is that Western governments have mostly accomplished their goals over the last 45 years: it’s just that their ur-goal was to make the rich richer. If that meant burning everything else down, they were OK with that. There are a number of reasons for this, but basically political elites were bought: do what the rich want and even if you lose office you’ll be very well taken care of. Instead of viewing government as “theirs” and their countries as “belonging to them” they viewed political office as a way to get rich. Instead of viewing the rich as their competitors for power, to be kept under control, they viewed them as their benefactors and as the ones who could put them into office. Or, put another way, most elected representatives saw themselves as de-facto employees, or contractors, of the rich and corporations.

This view has explanatory power: politicians do what you’d expect them to do if it were true. Take a look at Trump: his budget has 4 trillion in tax cuts for the rich, and to partially pay for those cuts, it is getting rid of 800 billion in Medicare funding. The idea that he’s some sort of economic populist is laughable. He’s making the rich get richer, just like every other President since Carter (though Reagan was the real inflection point.)

This wasn’t always the case. From 33 till around 68 or so, the primary policy goal in America was the growth and prosperity of the middle class, and most politicians, while they’d take the money of corporations and rich to some extent, saw them as the enemy, to be kept under control.

So, let’s turn to the CCP. They have lifted more people out of poverty than every other country combined. The one-child policy, whether you agree with it or not, did get China’s population growth under control. They are ahead in 80% of techs, when 20 years ago that number belonged to the US. They have the largest industrial economy in the world. They are reducing housing prices, which was their goal. They are reducing inequality and smashing the number of billionaires. They are installing more renewable energy than the rest of the world combined. They are building industrial stacks so that nothing they actually need comes from the rest of the world—they’re not quite there yet but they will be. (Don’t invest in TMSC long term, their near monopoly position is almost over and they will soon be overtaken by the Chinese. Three to five years at most is my guess.)

The CCP accomplishes its goals. Its primary goal is:

The Preservation of its own power. There are two branches to this: avoidance of foreign military conquest or regime change, and avoidance of domestic collapse or revolt.

To be powerful, and thus not be at the mercy of foreigners (one of Mao’s main goals) requires an educated, prosperous population and an industrial economy, because military power post-industrial revolution is primarily a result of technology plus industry. If another country can defeat you militarily, you won’t stay in power if they don’t want you to.

Domestically if the population loves you (and all polling shows vast support for the CCP) you will keep power. If they despise you, you will eventually lose power. The Soviets, with all their tanks and soldiers, fell in part because neither the people nor the elites believed in rule by the Party any more. So making the people prosperous is job one for protecting the CCP’s rule. Prosperous people don’t revolt. The Chinese believe this more than any other civilization. The entire “Mandate of Heaven” is based on this, and for over two thousand years the Chinese have regarded the government as responsible for prosperity. When it can no longer provide it, not only is overthrowing it justified, it is even virtuous. On the other hand, to overthrow a government which takes care of the people is vile, and understood as such.

Likewise, if one doesn’t want a change in which elites control the country, one can’t allow domestic power centers other than the party to spring up. This is why the CCP has been crushing billionaires. This is why the CCP banned the Falun Gong (who had widespread membership, including members in the CCP.) Bilionaires were particularly pernicious, because they corrupted party members, and those members goals changed from keeping the CCP in power by making China stronger and people more prosperous, to making a small number of people rich at the cost of general prosperity.

Xi was absolutely correct to make going after corruption his first and most important goal, because the CCP had split into factions and those factions were putting their own prosperity and strength above those of the party and the country. Left unchecked China would have fallen into a corruption spiral, inequality would have spiralled out of control and even if the CCP existed in form, it would no longer be its own power center, but controlled by others.

Now it should be understood that the CCP’s basic ideology isn’t “stay in power at all costs”. Like all ideologies it justifies it otherwise. It would say, and many party members, probably including Xi, would say that the party wants to stay in power because it can make China powerful and prosperous.

Given China’s progress since the party took over (and there was plenty of progress under Mao, don’t let anyone tell you otherwise — education and lifespand went way up), the CCP feels entirely justified in this belief.

Of course all things pass, and at some point the CCP will fail and be replaced, either in form (abolished) or by takeover. The Democratic party still exists in America, after all, but FDR or even LBJ would not recognize it, nor have any respect for it. Even Carter, the original neoliberal, by the end of his life, found it abominable. (I suspect young President Carter didn’t fully understand the consequences of what he helped birth.)

But for now, the CCP stands in its glory, having accomplished much of what it originally set out to do. It kicked out foreign occupiers. It made China strong enough that it could no longer be pushed around or occupied. It made the Chinese people prosperous. It gained the technological and industrial lead over the West.

It did so because it regards China as belonging to it, and believes that it has a responsibility to the people of China and that it deserves and will keep its power only if it delivers for the people of China: not for a minority, but for the masses.

None of this is to say the CCP is perfect, just that it’s an effective government which actually wants a prosperous population.

Our governments are effective, but what they want is richer rich people. As a result they will become ineffective and at some point they will either fall and change form and rise again, or they will devolve into full-on failed states.

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Prices of Both Housing And Rent Are Decreasing In China

In 2016, Xi said that houses were for living in, not for speculating. The Chinese government took steps to reduce prices, those steps took time to bear fruit.

 

 

Likewise, rent prices have been dropping recently:

And yes, this is a result of government policy:

While, according to the PBOC, in the pre-pandemic decade, the annual rental inflation in China exceeded 1.2%, it slowed significantly in recent years and has been in the negative in the last twelve months. In March 2025, the rent of the rental housing component of the consumer price index (CPI) showed a 0.1% year-on-year decline, trending upwards, however, from -0.4% and -0.3% annual change rates previously registered in September 2024 and December 2024, respectively.

“In recent years, rents have declined due to lower income expectations and the increase in government-subsidized housing supply. This has provided tenants with more options and increased bargaining power, making lease renewals a key challenge for leasing companies,” noted Savills in their 2025 Chinese Real Estate Market Outlook.

Now you might think “this means the Chinese economy or citizen is in trouble!” No.

In stark contrast to the slowdown across housing and industry, however, Chinese consumers appear motivated to open their wallets and spend on goods. Retail sales grew 6.4% in May, topping expectations and sharply accelerating from April’s 5.1% rise.

Now, standard Western economists think that the real-estate market slumping is bad, and retail trade going up is good, but they’re both good and they’re both a result of government policy. China wants relatively cheap real-estate and to increase the size of its domestic consumer market so its industry is less reliant on exports. (Trump has kindly demonstrated the problem with over-reliance on trade partners.)

The thing is that if real-estate had kept going up in price the way it did in the past, the CCP would be in danger: their legitimacy rests on the idea that people’s lives keep betting better. For many years I kept reading young people in China saying they couldn’t afford to own a home. That was (and still is, to some extent) a problem. Xi acted on it.

Further high real-estate prices increase the costs of every single business, since they increase the costs of employees. China wants to stay an industrial power, not become worthless rentiers and financiers, and as such real-estate can’t be allowed to increase too much.

Now for a long time real-estate is how city government financed themselves. It was an engine which allowed growth. But when it started becoming a financial game, with people owning multiple condos or houses; prices increasing faster than wages and people locked out of ownership Beijing acted.

You can’t be an industrial power if rentiers: people who expect to make money thru time arbitrage and managed scarcity, are in charge of your society.

It is also true that if you aren’t a major manufacturing power you can’t become or remain a major military power. (Britain says “Hi!” America says, “uhhhhh….”)

Anyway, China needs to keep housing and rental prices down. At the very least they need to increase less than wage increases and for many years.

All signs are, that as is most often the case, the CCP is succeeding at the policy goals it set out for itself.

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Losing Our Asian Allies – And Fast

Ian in his last post mentioned that our Asian allies are slipping away from us. While we pretend to strategically re-orient the Japanese are engaging in massive rearmament begun by Abe and being continued by the current government. Japan has lost confidence in the American security umbrella because of the deceit we’ve displayed in foreign relations. The Koreans? I lived in Korea. They’re simply apoplectic. Some are even at the point where they are willing to consider a loose confederation with the north, an entente of sorts so the South has the protection of the North’s nuclear umbrella and the North gains goods and services from the South.

This is simply unheard of. When I talked to one of my former students who now works in the foreign ministry and he told me this I was gobsmacked.

Ian’s correct. For 400 years the balance of payments from the rest of the world went to the Littoral seapower states. For the last 50 years the balance of payments has been reversed.  All that gold is going back home. In one generation the United States has squandered all the goodwill and wealth it received during WWI and WWII. China in the last 50 years has lifted more people out of poverty than the rest of the world did during all of recorded history. Chew on that stat for a moment.

I will be visiting China and South Korea to do a 20 year retrospective tour and a 30 year retrospective tour on the former and the latter. I don’t know what to expect, but I remember China 20 years ago and being blown away.

The USA is in deep strategic shit. For 200+ years our power has been based on our complete hegemony of this hemisphere. For 75 of the last 100 years our main strategic goal has been the prevention of one power or an alliance of powers attaining hegemonic power over the Eurasian landmass. In the last six years we’ve abandoned that VITAL national interest for what? We’ve driven Russia into the arms of China. India lost all confidence in us. Now East Asia has.

If a single power or coalition of powers dominate the Eurasian landmass our two oceans will not protect us.

It appears I might have been wrong about the Israeli-Iran pissing contest being the opening act of WWIII. Good. What it really feels like is the first Balkan War in 1912. The calculus is being made in Beijing. And Tokyo. And Seoul. And Taipei. We lack the ability to protect our allies conventionally. And no one wants nukes.

I don’t have any smart quip to conclude with except a Spanish expletive, “la puebla es jodida.”

You get the idea.

The End of America as the Essential Consumer Nation

For ages, everyone needed access to the American market. I used to call the US, “the consumer of last resort.” If you wanted to get rich, if you wanted to industrialize, if you wanted to scale, you needed the American market. Europe sold to the US, Japan sold to the US, South Korean and China sold to the US. This requirement is why Japan was forced to sign the Plaza Accords, which basically destroyed their future. Oh, life in Japan is fine now, but it’s no longer the roaring Tiger of the 80s.

But the US has lost its place, which is why China was able to laugh in its face when Trump tried to use tariffs against it. His assumption was that China needed the American market. This was true 20 years ago, maybe true ten years ago, but it’s not true now.

But wait… there’s more!

Not so pretty, is it? And unlike America, Chinese consumers aren’t in debt. Their market isn’t based on a deck of cards or predatory lending meant to lock consumers into never ending debt payments.

Looks a lot like America in the 50s and 60s, actually.

China’s growing fast, and certain respects, they’re growing smart.

China is building nuclear plants 2 to 4 times faster than the West and 3 to 7 times cheaper”

Further, China is building far more renewable energy than anyone else, and MAGidiots beliefs aside, it’s working out just fine for them. Ninety percent of new power in China is renewable.

You can see this on this lovely map:

Indeed, for the first time ever, China’s increasing energy demand happened at the same time as a reduction in CO2 production. If there’s a hope for us on climate change (there really isn’t, but still) it’s that China is the primary industrial power AND its leaders and population aren’t idiots who think climate change is a hoax or that it’s real but ignoring it is good for the economy.

Now this isn’t to say that China’s all wonderful or anything. They have high speed trains and they’re electrifying based on renewable energy and to a much lesser extent nuclear fast, but they still have an insane car-centric society.

Still, they’re more sane than any other major country, by a fair margin.

China is now the world’s largest consumer, industrial producer, ship builder, drone maker, auto manufacturer, leads in about 80% of tech fields, produces more scientific papers and patents than any other country, has 8 of the world’s top 10 research universities (Harvard is the only American university on the list, at , but…. recent events are not promising), the most electricity production and the cleanest energy mix of any major country.

The idea that China and the US have a serious rivalry is laughable. The US has lost. It’s like Britain in 1920. It’s all over, except, possibly, for the shooting.

 

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America’s Military Power Is a Legacy Asset

Chinese and American flags flying together

Since the industrial revolution, military power has been largely a function of three factors:

  1. Technology
  2. Industrial Capacity
  3. Population

As time goes by, population becomes less important (see, rise of drones), but it still matters. Think of it as something like Tech x IndCap x (Pop x .5).

The US has a powerful military, though most of the technology is one or two generations old. The general consensus is that Pakistan’s Chinese jets (themselves last-gen tech) out-performed India’s Western jets.

At this point, China is ahead in about 80 percent of tech fields. China has 31 percent of world industrial capacity, and the US about 16 percent, meaning that China has about twice as much. Further, China owns the entire supply chain for many of its technologies, whereas the US’s supply chain is reliant on China.

Finally, of course, China’s share of world industrial capacity is increasing.

A lot of civilian industry can easily be turned into military tech. This is what made the US “the arsenal of democracy” in World War II.

China has about 230x the shipbuilding capacity of the US.

China produces about 20K civilian drones a day. The US produces about 20K civilian drones a year.

The US and Canada combined produce about 12 million cars a year. China produces about 30 million cars a year.

So in a real war, where civilian industry is retooled for military production, well, China is well ahead. In the case of drones and ships, ludicrously ahead.

The US finds itself in a similar position to Japan on the eve of the Pacific War. Japan had a powerful fleet and air force, but it couldn’t replace equipment losses to match the rate of the US, let alone expand its arsenal. If it isn’t a “short victorious war,” the US loses, unless it goes nuclear, in which case everyone loses.

This imbalance is only going to get worse. China has a ridiculously small army of about two million, with a million paramilitary. When you consider its population of 1.4 billion, well, again, China is similar to the US before WW2; an industrial behemoth with an undersize military, but which can be expected to ramp up — fast.

(These numbers are better if one includes South Korea and Japan, or even the EU, but then one has to add Russia to the Chinese side. And the way the US is acting, it’s less and less clear its allies will support it in a shooting war, especially if it starts the war. Never thought I’d say that about Japan, but Trump has really shit the bed with his insane trade war.)

All of this is going to get worse and worse for the US. China is increasing its tech and industrial lead, while the US is systematically de-funding its research sector even as erratic economic policy makes long-term investment in new industrial capacity difficult. China’s civilian airline industry is taking off, its car industry is expanding as the West’s collapse, and it’s the only real player in the drone space.

China doesn’t want a war for the simple reason that the longer they put one off, the easier it will be if it happens — and the less likely it will be to happen, because Americans will be unable to sustain the delusion that they have any chance of winning said war.

The American era is over. It’s even likely that the US will lose control of South America, which it has had since the late 19th century. (Yes, there were theoretically independent nations in South America. Theoretically.) It will be pushed back to its North American stronghold, where it even seems to be attempting to lose effective control of Mexico and Canada, which is an entirely self-inflicted wound, as both nations wanted to stay under the US wing.

Just as the sun set on the British Empire, today it is at the horizon for America, and the long European supremacy is nearly over. The world returns to its normal state, where the Middle Kingdom is the most important and prosperous country in the world.

 

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“Art of the Cave”: Trump Walks Back China Tariffs For 90 Days

Well, maybe. Who the hell knows what he’ll do. Anyway, tariffs are back to 30% on China and 10% on America.

This is exactly what China demanded, for tariffs to go back to what they were before April 2nd.

There will still be a two month trade burp. Ships weren’t leaving China for the US at all, literally zero. Lot of freight companies are about to make a mint, though. So expect some shortages, but nothing worse than Covid, and hopefully lasting less time.

The fundamental problem remains, however, which is that there’s no certainty around any of this, so business people can’t make long term plans, including plans to build or relocate manufacturing. Trump and the US can’t be trusted to stay steady on policy, so avoiding making big plans involving the US makes sense.

The Great Power picture is clearer, however. The US tried to impose its will on China and failed. China wouldn’t negotiate till its pre-conditions were met. The world has two great powers, with the EU bidding to become the third (I think they’ll fail, but that’s what the rearmament is about.)

And, in economic terms, China is by far the pre-eminent great power. It isn’t even close. The era of American hegemony is officially over. The US tried to impose its will on the world and failed.

This blog has always been free to read, but it isn’t free to produce. If you’d like to support my writing, I’d appreciate it. You can donate or subscribe by clicking on this link.

 

America Is Trying To Form An Anti-China Trade Bloc

Trump backed off on most of his tariffs after Japan sold a ton of bonds and he panicked. He replaced most of the tariffs with a blanket 10%, and kept tariffs on China and Canada (because those countries had counter-tariffed the US, supposedly.) Now the report is that what US negotiators are demanding is that in exchange for avoiding US tariffs, other countries tariff China.

It should be noted, first, that China will not back down. The way Trump is framing this is “China will come to us” and sub-voce “beg” and that’s not happening, it would be a massive loss of face for Xi and for China and China is a “face” society. So massive tariffs on both sides will continue unless the US makes the first overtures and in a face saving way. The US rates on China are 125% and the Chinese rates on America are 85%.

These are nuclear levels and are going to bring trade damn-near to a halt. China has also put export bans on a number of companies for “dual use” techs: in practice, they’ve hit Lockheed and Boeing (big military aviation companies) so hard that I’m not sure those companies will be able to build planes, the supply chain is that China-centric and there are no alternatives.

(Aside: the criminally minded will be scrambling to smuggle into the US, and fortunes will be made, as they were during Prohibition. Those who wish to reduce criminal risks can just import Chinese goods to Canada and Mexico and sell them to whomever. “I don’t know officer, I don’t ask them why they want all those machine parts. Not my business.”)

It’s hard to say how this will play out, because:

  • Lots of western countries have a hate-on for China. European and Canadian politicians, early on in Trump’s regime, had suggested “why tariff us, let’s go after China together!”
  • But… that was then, and this is now. A lot has changed in three months. No one trusts Trump to keep deals any more and China is looking mighty stable. Even if you’d really rather do business with the US, like Europe, can you expect any deal to be kept?

I’m genuinely unsure how this will play out. My personal preference would be to tell the US and Trump to pound sand: they don’t keep their deals, so you just can’t do business with them no matter what the theoretical case is. (That case is mostly that it’s hard to compete with China, their goods are so cheap, whereas the US is sclerotic so you can sell them stuff, especially if they’re in a trade war with China and can’t buy cheap: charge them 2x as much and still come in under!)

If Trump had gone for this as the start, he would have gotten it. Canada and Europe would have fallen over themselves to join in. Now? Not so sure.

There’s a lot of “Trump is a genius and there is a PLAN” going around in MAGA circles. Bullshit. If this was Trump’s actual goal, what he did made it harder to achieve rather than easier. What actually happened is that Japan jerked the bond market’s chain and Trump backed down and is trying to pivot.

It’s not a completely stupid pivot, the West isn’t competitive against Chinese manufacturing, and one way to deal with that (a bad way, but still a way) is to just cut China out of Western markets and sell over-priced goods to each other.

Years ago I said that the way geopolitics were playing out was leading to a “New Cold War” — there’s an entire category on this blog, just on that.

Crunch time has come and we’ll see if it happens, and who’s on each side. Trump’s made America’s chances of putting together a strong coalition far weaker than they should have been, but anti-China fear and a refusal to end rentierism in the West mean that we can’t, actually, compete against China, so there’s still a strong temptation to form that anti-China bloc.

If so, we’ll be the weaker side, as the USSR/Warsaw Pact was last time and we will lose the new Cold war, falling further and further behind technologically and watching as the Chinese enjoy goods we can barely even dream of, just as was true of the late Soviet Union.

Everything, and I mean everything, will be sacrificed to keep the oligarchs in power, keep making them richer and keep the flow of unearned cash pouring into every rich person’s orifices.

Update: Seems that the EU and China are in talks to end EU tariffs on electric vehicles. That sound you hear is Elon Musk puckering up to kiss his ass goodbye.

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China Cuts The Legs Out Underneath The US LNG Industry

I didn’t see this coming:

In a move that stunned traders, analysts and policymakers alike, China has just announced a complete halt on all liquefied natural gas imports from the United States. A decision made abruptly with no prior indication, no phased reduction and no explanation beyond a terse statement from Beijing…

…China was one of the fastest growing markets for American LNG, importing more than four million tons annually. Cutting that overnight is more than symbolic, it’s surgical.

Early reactions have been nothing short of panic. Energy markets were jolted, LNG prices in Europe and Asia swung wildly and US energy firms reported immediate financial hits…

…Overnight, the US was eliminated from one of the world’s most lucrative gas markets worth more than US$2.4 billion a year. Let that number sink in. More than 4.4 million tons of American LNG every single year now suddenly has nowhere to go.

Ports along the Gulf Coast are already feeling the shock. Massive LNG tankers are sitting idle with nowhere to dock, no buyers to receive them. Terminal operators are scrambling to reroute shipments, but the damage is done. Revenue streams are drying up. American energy firms are haemorrhaging cash: millions of dollars in losses each day…

China has begun rerouting LNG cargoes originally meant for East Asia straight into Europe’s energy-hungry markets. The message is clear: If the US wants to weaponise trade, China will weaponise its energy strategy.

Why Europe? Because it’s vulnerable and China knows it. Since the Russian invasion of Ukraine, the European Union has been scrambling to find a replacement for Russian gas. For the past two years, the US had been the emergency supplier, shipping LNG across the Atlantic to prevent blackouts and political chaos in capitals from Berlin to Warsaw. But that relationship, built out of necessity, was never guaranteed.

And China just exposed that fragility. By stepping in with competitive LG offers at lower prices, China is capitalising on a moment of weakness. European energy firms, already strained by inflation and political pressure, are welcoming any chance to secure stable and affordable supply.

One of the major stories of the Ukraine war is how the US took advantage of the pipeline sabotage and sanctions to sell Europe natural gas. Expensive natural gas. This increased the energy cost of heavy industry and led to a lot of European, especially German factories, shuttering and moving to the US.

Win/Win. For America.

China isn’t itself an LNG exporter, but it controls a lot of the market thru long term contracts. It has an excess of what it needs, and it just signed a new contract with Australia for long term supply:

In March 2025, Australia’s energy giant Woodside Energy inked a game-changing 15-year contract with China Resources Gas, one of Beijing’s top natural gas distributors.

Under the deal, Australia will begin supplying 600,000 tons of LNG per year, starting in 2027. While the volume might not seem earth-shattering on paper, the symbolism behind the agreement is monumental…

… Australian LNG is currently 20% cheaper than US shipments largely due to proximity and lower transportation costs. It takes roughly 10 fewer days for Australian cargo to reach Chinese ports, compared to those from the US.

Australia, of course, has been rather anti-China and a big US ally, BUT cold hard cash, err, trumps that.

What’s becoming clear about this trade war is that China has gamed it out. They thought ahead, having learned lessons during the first Trump administration: they were ready. They’ve massively reduced their vulnerabilities and carefully examined America’s weaknesses, and now they’re hitting them. Hard.

This realigns American allies in Europe and Australia more towards China, it hurts the US, and it highlights the benefits of doing business with China.

 

Xi Jingping

Xi, as we discussed in our last article, has been planning for this, not just since Trump, but since he took power. He’s locked and loaded and he’s firing his guns. The more Trump doubles down, the more America will be hurt, because China needs America less than America needs China. In many cases America firms have no choice but to buy from China, there is nowhere else to get what they need, while China either has alternatives or has already written off buying from the US, as is the case with chips. To China, America is a lost cause: it can’t be relied on either as a supplier or a buyer.

If America’s effectively a write-off, well, treat it like a write-off. And that’s what China is doing.

Trump and many Americans thought that China was the vulnerable one, that China was in a weaker position than them (they made the same mistake with Canada). It isn’t. Now Europe and Japan are holding weaker hands than the US in a trade war, but here’s China actually strengthening Europe.

It is to laugh. Trump’s fundamentally incompetent, a D- player and he’s going up against Xi, who’s arguably a great statesman, and so far, Xi is ripping him a new one.

This is what actual planning and actual competence looks like: see threats in the future and get ready for them. When someone declares you their enemy, as the US has repeatedly, take them seriously.

We haven’t seen that in any Western country in at least two generations.

 

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