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China is a teetering mess, not a threat. Give them a little shove.

Posted by John T. Reed on

China is more of a mess than a threat. 
But because they are PERCEIVED by too many as a threat, they are an annoyance and a distraction. We should, like Dorothy’s dog Toto, pull back the curtain and reveal the fraudster trying to sound like the “great and powerful Oz.”
We should also actively attack their weaknesses. The basic principle of offense is strength against weakness. What are China’s weaknesses and how can we attack them?
• Pollution—advertise it to discourage people from going there to live or invest, enlist the environmental movement strange bedfellows to punish China with sanctions, bans on investment there, boycotts of their products
• Shortage of females caused by one-child policy—Adopt U.S. immigration policy that makes it much easier for young single males and females of merit to emigrate to the U.S. Getting the females exacerbates China’s problem. Getting the males elevates the average talent level of us Americans.
• Shortage of young people—Ditto. Change laws to make it easier for young Chines couples with multiple k-12 children to emigrate to the U.S. That helps our mild lack of young people problem and exacerbates China’s severe lack of young people, which was also caused by the disastrous one-child policy (which was only softened, not eliminated).
• Consumer confidence dropping—hit ’em with the 25% tariff that Trump has threatened
• Shanghai stock market plummeted more than 25%—Ditto
• Their own subprime crisis—A secret crisis of more bad loans than our subprime crisis. Bankrupt banks, bankrupt companies, bad loans to government enterprises and local/regional governments all being covered up by the Chinese Communist party, albeit not a good enough cover-up that I and others are not writing about it. What to you do to an entity that is deep in debt to finish them off? Lower their income (25% tariff), raise their expenses (encourage more inflation in the yuan, hit them with an arms race, daily Freedom of Navigation patrols by the Spratly Islands), increase the interest rates they pay on their debt (yuan inflation would do that on debt owed in foreign currencies), lower their credit rating (publish intelligence reports on why their credit should be lowered).
• Inability to make needed structural reform—Increased emphasis on our NOT doing that. More deregulation, lower taxes on business. Lower barriers to entry and exit. Increase encouragement of foreign direct investment in the U.S. Increased ease of emigration to the U.S. by successful entrepreneurs.
• Dishonest numbers, cover-ups, lack of transparency—Release intelligence reports that reveal the truth.
• Weak yuan currency—Ditto. Tell the world their REAL debt-to GDP ratio (253%—tied with Japan for worst in the world and China’s is more than twice ours—104%—and ours was bad enough for me to feel the need to write a book about hyperinflation danger. Vote against the yuan being a reserve currency whenever possible. Pass laws and regulations that facilitate Chinese getting their money out of the yuan in spite of China capital controls. Nations should not encourage citizens of other countries to violate the laws of their countries—if the laws are moral like those against fraud—but NOT immoral laws like capital controls. (Capital controls prohibit owning gold or foreign currency, in other words, they ry to prevent citizens of a country with inflation from using uninflated currency like gold or another country’s currency. We should facilitate Chines getting their money out of the yuan and into USD.)
• Poor country—In per capita GDP, China ranks 72nd in the world just behind Kazakhstan and just above Nauru (IMF; 71st just behind Kazakhstan and just above Lebanon (World Bank); and 75th just behind Kazakhstan and just above Cuba (CIA). Freaking Cuba. Why are Americans afraid of China, but not Kazakhstan, Nauru, Lebanon, or Cuba? Yeah, I know there are a lot of Chinese. There a lot more non-Chinese in the world—six billion. China has virtually no allies. We have more than anyone.
• Masses of empty high rise apartment and office buildings—massive debt; see too much debt above.
China apparently does not believe that a stitch in time saves nine. Should we let that continue? No. We have a chance to win now. Go for it. We may be weaker if we wait.
Businessweek says China’s Communist party is obsessed with social stability. So increase unemployment with the 25% tariff. I would even end diplomatic relations with them to cause their people to think, “Oh, no. We’re going back to the Mao era.” Also, make them fear their currency will hyperinflate and that their bank deposits will be lost to bank failure. Autonomous Research says 24% of bank loans in China have gone bad. The government says less than 2% for an example of cover-up Chinese Communist style. I may be as high as one third of China’s GDP.
Communist China is on just a mess. It is a monstrous fraud. The Great and Powerful Xi.
BusinessWeek says the Chinese Communist party is a debt junkie. How do you finish off a junkie? Get him to increase the size of his hits. I would not be the lender, but if we can cause them financial difficulties—25% tariff—that will cause them to inject more debt that they cannot pay off.
A mistake in monetary policy—making it too tight (deflation)—would crush them under harder-to-pay-off debt, but I do not know how you encourage that to happen.
First and foremost, China is a communist dictatorship. They fear their own people. Wanna freak them out. Make them think the party is about to lose power. They will try to preserve it with guns. That is the last thing China needs to love its many problems.
They are arguably at a tipping point. Tip them.

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