What if its own source of imports are restricted? It is dependent on Australia, Indonesia, Africa and South America for critical mineral imports. A large segment of its import sources are either politically hostile, or geographically distant or economically, and militarily weak. We known China is unable to protect is trade sources, and supply chain if conflict arises. Therefore I dont think China can use this as trump card. However I agree it has certain leverage until a alternate mineral processing capacity has been built outside China.
Chinese Economics Thread
- Thread starter Norfolk
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didnt CN previosuly halted imports of iron ore from Aus, because of trade currency issue?
It happened in the peacetime. It is very likely that Guinean and Brazilian iron can be easily easily stopped being shipped to China with simple overt or implied threat to these source nations. What tool does China has if its critical mineral imports are interdicted in the Atlantic or Indian ocean? If Chinas export control begins to bite the military industrial complex painfully, there will be some sort of these responses. Bar Brazil, South America has been politically and militarily emasculated so that It would abide by any directives from the DC.
Would land based routes of the BRI help with that? The US would have to threaten a lot of nations and countries and watch a lot of trading lines. If the US can somehow stop everyone who doesn’t have a land border with China from sending their metals to China as a worst case scenario, they still have Russia.
I think Russia can and may eventually be China’s Canada. An enormous resource basket that can provide them with basically anything. Timber, oil, rare earths, metals.
Iron ore is very important. A big change is happening as the production in partially Chinese owned Guinean mines increases and the dependency on Australia diminishes. As to wartime situations China has been building twice as many navy ships as US after around 2010. Currently they have more ships but smaller volume. The full shipbuilding capacity in China is 30 times that of US. They are approaching a situation where they can dominate Western pacific and Indian ocean.
The idea that the American & British way to run stock exchanges is the only economically sound way is not correct. In the US you are now building up the AI bubble. The previous was the fixed asset & refinancing bubble of 2007. Before that the smaller Year 2000 bubble. Those bubbles were "solved" by creating enormous additional liquidity in the financial sphere. Presently in the US the huge profits of some companies actually are possible as the federal government has that huge deficit. The economic structure is unsustainable. The stock market is able to make a minority rich but not able to help the majority of people.
I recently placed my economic thoughts visible in the net:
Those things are actually all well know but not told often enough.
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This is a misreading of economic history. It's also a slight misreading of how the stock markets benefits everyday Americans and which section of Americans.
There are several problems with the stock market today. First, while the P/E ratio is not the most extreme in history, it is nonetheless high and quite suspicious considering the economic context of the American economy at present day. Second, the stock market is extremely tech and AI heavy, which inherently is based on the promise of future demand rather than current demand. It's very reminiscent of the dot-com crash. The Internet changed everything, but Pets.com was not worth millions upon millions. Third, the stock market is not accessible to everyone. I don't actually think that extreme wealth concentration is necessarily the problem. It's not beneficial, but it's not the root cause. The problem is that the stock market is not sufficiently democratized and it's not sufficiently regulated.
There is an actual problem of Chinese savings. Too high savings isn't what I would consider to be "bad". The "bad" thing is that Chinese people were investing lots of savings in property instead of something productive. Now that this investment vehicle is gone, they're just, as far as I'm aware, sticking it under their mattress.
If this money was instead routed into the stock market, given sufficient quantity and regulation, the value of stock market would have less volatility and a more efficient allocation of capital. It would give Chinese companies an additional lever to raise capital (and make them less vulnerable to deflationary effects) and invest into more efficient production and ultimately, cheaper goods for Chinese consumers. Which then frees up more money for them to invest into the stock market which leads to more money allocated to capital.... and so on. It becomes a virtuous circle.
Financialization is good, but it can certainly be bad too. Right now, underdeveloped Chinese capital markets are a major opportunity that the government should really look at. It would make a lot of other problems easier. Though it would also introduce a ton of new problems as well.