Hello. I love ya! My question is: What happens if China dumps those dollars to the world market for goods and services during a SinoAmerican war over Taiwan? Or more to the point, how can they use dollars against USA?
Damn china is really faked their state treasury, they're much richer than any states in the world amazing Also did you say market monopoly as crime while also showing other 'west' country doing the same?? 🤔 That's very interesting half truth propaganda method, i must write that
I love it when you the west still think you can control China. And China loving it too. And also, when you the west thinks you cannot be controlled by anybody.
Would love to see more videos on how nations are "sanction-proofing" their economies by building redundancies, seeking to "de-risk" their economies etc.
As someone who lived through a sanctioned era. It's a "cluster fudge." In Apartheid South Africa the government tried to go it alone like Hitler. South Africa was the leading producer of gold at the time with its signature gold coin being the Kruger Rand (1 ounce fine gold) which became illegal to hold/tender in sanctioned countries. Exports were commodity based with a developing manufacturing sector at the time. South Africa like the Persian Gulf, modernised on the back of commodity revenue. It also created a rich English & Jewish oligarchy with the Afrikaners retaining political control as their demographics was the largest among the European & West Asian settlers. Apartheid had a weird path of categorising people similar to the Nazis as by default Jesus was an asian and thus a non-white. There were Persians, Turks & other west Asian muslims who were considered Indian (Islam is a semitic religion btw) with Jews & Christians from these lands were considered white. Moreover Japanese, Taiwanese & Philippinos were considered white but South Asians, Chinese & South East Asians were considered black/non-white. The 1980s saw the repeal of US & non-Axis powers' capital withdrawal out of the country. The first hit were the sweat shops who were heavily subsidised to supply the local market with cheap goods as only The UK, Taiwan & Israel were friendly to trade. Germany & Japan had no foreign policy so it was trade as normal. The prices of imported goods increased as the Rand slid. Interest rates hovered around 20+% during this era to attract foreign capital. Sanctions broke the back of the South African Apartheid government as they ran up several budgetary deficits in the 1980's compared to surpluses post war when foreign capital poured in to take advantage of the metal boom in the old Transvaal and slave wages to non-white workers in manufacturing plants. The international motor industry benefitted hugely from it during the wage discrimination era. Today its just called capitalism & prudent cost control. I haven't spoken about the South African Industrial Military Complex as it is another long dragged out debacle with a whole load of hanky panky going on. There was a civilian plane crash "The Helderberg" which was potentially guilty of carrying Military supplies on a civilian craft. All that loss of life, black on black violence, white & skilled flight out of the country etc for a Russian type oligarchy with all the trimmings supplied for free to rule the country as a "stable western style democracy." The police state affectly defunded & privatised for personal security. A defunded crimminal & civil judiciary to drag on court proceedings to bleed the disputed parties. Furthermore our host is a research fellow from a sister University of mine, UCT. He can audit my experiences with empirical evidence & referencing scholarly journals of the events as they unfolded and were studied & documented.
@@louvendran7273i have no idea who you’re replying to but thank you for the history lesson on South Africa I found it super interesting. It seems to me from afar like the current leaders of South Africa are extremely corrupt and sadly even worse statespeople than the government they replaced, who were oppressive but at least kept the electricity running. Do you feel that the current government is fixated on replacing white and asian officials with black officials for historical grievance reasons and that this is causing a talent deficit within government institutions? That is the perception I’ve heard and it seems accurate from afar but what do I know lol I’m Canadian.
@@AT-nw6crhat a load of BS. They were also incompetent just as the current government. The electricity they kept running were used to service 10 percent of the population. It not so hard to service 10 percent while leaving 90 percent in perpetual darkness and poverty.
Wait so China was ploughing it's dollar reserves into foreign infrastructures investments? And this somehow slipped through the attention of US economists? How exactly did they think BRI was being financed?
Exactly, completely misleading title. Every economist knows the dollars were being invested as infrastructure instead of being recycled back into US economy as treasury debt purchases. This is literally the single biggest reason for USA turning on China. Check the timelines.
@@zenastronomy Bingo, another title playing into the China fear. It is fast becoming really really old. As a businessman who travels to China regularly. Let me tell you sth shocking. The Chinese ppl don't care about the US. They are too busy growing their country.
I don't see this as a bad thing. Instead of holding a bunch of US bonds, they're just buying assets/bonds from third world countries. It's China's money. They are free to do what they will with it. It's risky as well since a lot of the BRI projects aren't holding up well after the pandemic. It also helps third world countries develop their infrastructure. This is an oversight on part of the American economists since Chinese reserves are increasing but is there anything US could have done differently? Like I said earlier, this is China's money. Unless the Americans want a repeat of Russia SWIFT sanctions, (and all the implications of that action except with China) the most they can do now is to reduce the trade deficit with China and bring more manufacturing back to the US. They're already doing this.
if they do that then they need to abandon the dollar as the worlds reserve currency. which means they need to abandon the US military empire, as the pentagon budget military spending is funded through money printing due to the US dollar being the world's reserve currency. the US can choose to bring manufacturing home and abandon it's military empire (doubtful Israel will allow that). or it will have to accept having a trade surplus with china and the world.
@@Cheesecake99YearsAgo The 996 work culture isn't the brag that you think it is. Chinese workers are less productive in terms of output value than American workers despite working longer hours. Also working longer hours like that means that there is no work-life balance. This means that there is no time to raise a family and consume. Regardless of the mental toll this creates, this a recipe for disaster for the future. It is squeezing dry the potential of the present at the cost of the future. I may not be a fan of the CCP but I honestly wish well for the Chinese people. At this rate China is going to become like Japan except worse since China wouldn't be as wealthy as Japan.
@@theworddoner most poor Americans work 2 jobs 60-70hrs as well. both countries are quite messed up. but china does seem to be tackling issues, building houses, sanitation, hospital, universal health care, etc. so ppl there have hope. i suspect the 996 culture will end once ccp thinks its harming the country more than helping.
@@theworddoner Not according to the Tesla CEO speaking on his factories who said Chinese workers are both the most efficient in production and produce the highest quality relative to his other factories in the world. He's been quite critical of American workers. Musk's metrics would imply that Chinese workers are more productive in terms of output value than American workers for equal hours.
Simplification alert: the way that reserves end up at the central bank in the examples is just the simplest example. In real life, in case of a surplus, banks or exporters might immediately sell Dollars and in that case the central bank might actively buy them 'back' on the open market. This achieves the same effect. But, is 'active' (rather than not selling reserves). In the end, the effect is roughly the same. So, I chose to show it in it's simplest form.
It’s interesting that you talk about currency manipulation as a crime. Can you HONESTLY name a country that doesn’t manipulate its own currency? All countries are managing the level, but of course they need to balance various factors such as trade competitiveness, interest rates, capital outflow, etc. Actually, you don’t mention that dropping your own currency hurts your the living standards of your own country. That is why you don’t see ALL countries just dropping their currency. Money is of no value unless you spend them or has the ability to spend it. With the actions that US did against Russia, I wouldn’t be surprised if China hasn’t used their dollars to buy gold and have the remaining treasuries serve as collateral against gold that they lease. This way they are somewhat insulated against currency sanctions by the US.
I mean it's not like u haven't watched this channel long enough to figure out after a while this channel has a bias and agenda....especially in whitewashing western especially American economic transgressions and past...... The way he made it sound like currency manipulation by China is a crime,like as though america has not manipulated its currency hundreds of times before,and engage in economic strong arm tactics,sanctions and wars to coerce or even cripple other countries economies...... It's one thing if u do things defensively to protect or preserve ur own country's integrity it's another when u do it vindictively just to sabotage others and even drive them to the brink of collapse just to undermine them,then on some misbegotten act of faith of humanity,the ultimate act of shadenfreud u send the imf in on some false act of "altruism" to bail them out on the condition they change and subvert their laws to allow america a greater deal of control and power from within..... Just ask Thailand and Malaysia and south Korea in the 90s......Malaysian pm mahatir had some choice words for america during that fiasco. Mahatir and Gaddafi is right,america is the spawn of the devil.... And don't forget us Japan trade wars and plaza accord and window guidance in the 80s.....that ultimately led to one of the most productive and prosperous economies demise...... Most people in the world have no idea of Americas true level of vindictiveness and depravity....
@@normankoo6159 He never said China did something wrong. He only said that we should also look at other things than central banks' forex reserves when we make conclusions whether a country is manipulating their currency.
@@MajorGarland There is a huge connotation difference between manipulating vs. managing. I dislike the hidden bias in the choice of words. It’s no difference to how the US uses terrorists vs. freedom fighters. As any educated person knows, the management of a country’s own currency is critically important. So, why use the term manipulate??
Hey Joeri, could you do a video on the Asian Financial Crisis of 1997? It was this event that made the Chinese government pivot towards buying US Treasuries significantly.
as you point out, it seems like the chinese are just doing what many other countries are doing, but on a larger scale this is only a concern if you're an anti-china hawk. i, however, like you, am a nuance enjoyer, and so prefer to think about how to update frameworks and priors
The problem isnt "anti china hawks", but rather chinese warmongering. They managed to threaten - and in some case kill people in skirmishes - an entire series of neighboars, and are stuck in a mindset of having to conquer and subjugate Taiwan. And thats besides all the constant cyber attacks, spionage and criminality from China. Even beyond that, China heavily using and being able to influence dollars is important to know for America. Theyre manipulate the market to get themselves an advantage over others. Therefor its pretty relevant how China is preparing for conflict, just from common sense.
Not only that, but China is not really hiding. Western economists just quite don't understand the chinese economic model as they try forcefit it into their models.
China is also buying gold in large quantities. If they use USD for it, they also lower their foreign exchange reserves, without actually lowering them. There was another analyst who claimed China was printing money, to keep its currency down. This usually has the effect of lowering the currency value, but in this case, it serves the interest of CCP,
It's not good for US, the Dollar is used in favor of US big banks but against the geopolitical aspect of US. China has cracked the code of the game and uses the Dollar against US. What's the plan? Collapse of the Dollar you will say?! CBDC are one horizon, tracking, monitoring, fine tuning, all the good stuff!
Still not sure what was wrong with what they did. If they want to stash money, so what? If they want to channel it to development loans, so what? Why can't they do that?
Can you make one video on the uncovered interest parity and why it does not work? I know, it is a bit more theoretical. But you make great videos and the topics you describe are very understandable because of you.
China's centralized economic model is working. We know this by how badly the US' decentralized economic model is failing to compete against China. Which is why this video was made to blur the lines of reality.
This is only the half of the story. The Bank use these excess dollars to invest in infrastructures in developing countries (usually at a very delicious prices compared to the West and are of course good for local ppls). In return, China doesn't want the currency but specific mineral resources or agricultural products or the right to operate ports, and the money goes back to China as actual goods but not green papers. The US is now realizing that there is no way to plunder China's wealth through monetary policy as it does for many years. It's like a wheat field full of rebar. A scythe will only cut itself off.
Issue is that in a lot of cases it is not good for local people at all. There's numerous cases where Chinese companies do not employ local people within country but instead brings their own people in for the job.
@@tyronbasista2729 If not better, at least not worst. Go to one of those contries and see how those infrustrutions do good to ppls lives. Why ppl always keep thinking those contries are all sptuid enough to harm itself?
@@Jyryp Its not thanksgiving and I believe the leaders in those contries are not all idiots. Besides, if there is a better deal, the Westers could have done it decades ago. So, its the best deal so far.
@@ZLU-fc2ki cuz corrupt government. i live in one of those countries. i know the corruption, and the powerlessness of the people against the corruption.
Put simply, China puts those dollars to work by buying/building/investing in roads, rails, ports, infrastructure which drives economy both domestically and globally. Instead of sitting on it, or getting interest on it, wow who'd have thunk 😂
@@originalempa7037America bombs infrastructure and imposes sanctions on third world countries that refuses to let its elites loot their natural resources. China build infrastructure. How is it a problem again? And yes, I am serious. Name me one project the West built in 3rd world countries that makes their people better? All I get from westerners are lectures and sanctions and exploitation from Wall Street
@@originalempa7037I would argue that you do not understand China. It is questionable that it's in China's best interest to ruin any country's economy, they are the top trading partners for over half the countries in the world, but they still need to trade to keep their own economy going. Withdrawing any promised investment with the ones agree to participate in the BRI is a dangerous move will it hurt the local economy it would most definitely earn China a bad business reputation. End of the day, its their money, they can do whatever they want with it. Luckily they are investing in roads, bridges, airports, ports instead of military bases.
This is just shifting reserves from riskless assets to risky assets. It is just tunnel vision of neoclassical economists which made them unable to spot this.
Chinese numbers are backed by the IMF, which is basically USA. The thing here is that western models of economy that are heavily based on private property and profit don't quite work on the economy of China, since their goals are not really aligned with the "rules".
@@BolchevoluIistaWhen there's no better alternative what choice do developing countries have, Everyone else just gives humanitarian aid instead of actual development aid to improve our infrastructure and production capabilities. Then we are stuck in cycles of IMF bailouts which end in our recourses being exploited to pay back the high interest rates on the loans. That's still neocolonialism just wrapped up in a nice package.
Thanks for guiding us to this article. It's brilliant. The conclusions of the article aren't the conclusions of this video though. There's no talk about having to sell BRI assets to defend the RMB under any circumstance, and no mention of intended currency manipulation. I think for once Joeri made something look more controversial than it should be. I don't want to sound like a 'zijlijnpisser', thanks for the great effort!
The CFL is a political institution, he is an academic researcher, of course he comes to a different conclusion. He gave you an objective analysis, the CFL gives you an opinion. Both did what they are supposed to do. That doesn't mean the CFL is wrong (although they don't have the best track record), just that their opinions shouldn't be equated with the opinions or research of economists.
Good point Bob! Although that article is the main source for this video, I actually used many others and indeed draw slightly different conclusions. Maybe I should have been more clear about that difference.
@@MoneyMacro You don't have to do anything but be yourself. You're the sole sane economist on YT and we should all thank you for that. Personally, my wife and daughter are Chinese, so I'm extra-sensitive to China-related innuendo. Eg. attributing intentionality where there is none or using words like 'hiding' (the article says "those funds are - correctly - no longer counted as part of China’s official reserves"), 'scheme', 'currency manipulation', or implying that the US has the right to know exactly where all USD are once they enter international reserve status. China does strictly control capital and foreign exchange outflows, but there are very good reasons for this. It's easy to forget that during the '97 crisis, it was a source of stability in Asia exactly because of these controls, and we can be sure they learn their lessons from history. The redirection of USD from the bond market and the PBOC balance sheet to policy banks, commercial banks, and BRI funds I think has an enormous positive impact. As Setser seems to acknowledge. it further increases financial stability (with even commercial banks attributing to this), and the use of accumulated savings to fund production or infrastructure is the very essence of financing global growth. Forgive me for the long-windedness. Getting me started about China criticism is like getting a Belgian aunt started about her neighbor's messy lawn. Please be well, and off to 300k subscribers!
@@BobBogaert you have a more optimistic view of China's moves. I'm still skeptical that these redirected funds to the BRI program are a net benefit overall. Countries have taken on unsustainable debts to fund projects that won't cause enough economic activity to justify them. In the current market of food scarcity through Ukraine war and rising interest rates, some of these BRI countries will need to have their debt forgiven or reworked for a longer duration. Though if I studied and built a family in China too, I'd want to hopeful also. Though if your daughter is young, you're probably moving to Belgium for your daughter's education.
@@Nabrolo I'm sure some of the projects will fail miserably. That's a statistical necessity. I'm also sure the media will make the most out of these, that's a geopolitical necessity. But if we look back 10 years later I will be very surprised if any of the predictions of the 'death trap diplomacy' hold true. As for education, I was asked that question a few times before, and I always answer that if I can survive 12 years of Catholic school and still think for myself, I trust my daughter to be able to finish Chinese education unscathed and open-minded. It's difficult finding the balance between cynicism, skepticism and naiveté. I try to be a skeptic optimist, and so far that works. My best to your family. 保重！
"Hiding" is overblown. In a crisis or war, the Belt and Road projects are not readily convertable assets in a crisis which China could dip into for cash. They reside in mostly poor foreign countries which could easily seize them by "nationalizing" these projects. China has exactly zero expeditionary forces to enforce its ownership of these projects anywhere outside of its immediate southeast Asia region. Without this long range far reaching military force to enforce ownership, China doesn't really own these projects. And if it did start throwing its weight around in places like Africa or South America, it would simply be doing what the US did during the Banana Republic years of American imperialism. In its early years as a third world country, China itself was quite clever at stealing capital investments from foreigners by simply removing official licensing or land rights to any projects that were funded by foreigners that displeased the CCP, thus "nationalizing" these projects /factories.
If a Chinese exporter is paid in USD, they go to their Chinese bank, which exchanges the USD for Yuan. But what is actually happening is that the Yuan are being printed out of thin air and the USD are being kept by the central bank as additional USD reserves. In other words, the incoming USD are not being sold for Yuan but are being held by the central government even though they were being paid to the Chinese exporter. Isn't the printing of additional Yuan highly inflationary?
Policy making is based on simple principles of causality and interdependency. So no policy is made in a vacuüm. The amazing thing of China's policies is that they think long-term on some issues of statehood. And the west would do good to balance its messy policy making by taking example to that. Especially in matters of environmental change short term policies, thoughts on profit and loss, electability etc are recipies for disaster. If we can think and act longterm while maintaining our open societies and democracy that would be the best.
its' what happens when you have a meritocracy and very very smart people running things (instead of cheerleaders in a popularity contest)...reminds me of high school student body the way the west is run
Trump's buffoonery was an embarrassment for the US. What happens now that China is losing it's ability to export? I have noticed that even manipulated state data shows a drop in exports.
These claims are a bit dubious. Even if China's numbers are opaque or distorted, the claims and research by Luis Martinez on China's GDP, which you covered, and this new claim, are rather roughshod, and its hard not to assume that they're politically-motivated to a significant degree.
Why are they dubious? What are the red-flags in the research? For this current video, undervaluing your currency is a tried and true tactic that has been used extensively throughout history. However, it tends to invoke a counter reaction by your trading partners. So, it makes total sense to hide it. Also, as noted many other countries are doing this as well, China is just the biggest.
@@MoneyMacro The Martinez one I found rather dubious - serious limitations to nighttime light density as a tool of GDP analysis - this one I found much more plausible, but I find it hard to believe that China doesn't mobilize these "hidden" foreign currency holdings when faced with inflation at home, and the scale alleged by mister Setser. I feel like there are other plausible reasons why "state-linked" investment firms and banks working in a multitude of nations and contexts might want to hold dollars.
@@MoneyMacro By the way this is the best economics channel on UA-cam hands down in my opinion. I love these topics even if I'm skeptical of some of the claims in the papers.
@@rashid8646 China's inflation is very low, sub 1% if I remember correctly. They don't need to mobilise anything. Also, as the primary manufacturer of many components/finished goods, they're less prone to inflation, provided their input costs remain low.
@@rashid8646 This video is not about the Martinez paper. It's about a report/paper by Brad Setser, which is quite well-sourced and well-reasoned. I enjoyed it and found it thought-provoking. Specifically, what/why are the claims and evidence that you object to? I personally think there are a couple limitations, but it's as good as any of the research coming from Rhodium Group or WEF these days.
Is there some good book you might recommend to learn more about macroeconomics? I'm a student of foreign affairs, but certainly I deem the material that I'm looking for should be written in plain language
I don't think it's that the Chinese government is especially smart, its just that Western Governments and Economists worship market forces and put the interests of investors before all else. So when a country doesn't respect these rules, they cry foul play.
Yeah, that's not gonna happen. More likely the reverse *could* happen. I mean, what if everyone in debt to PRChina holding USD suddenly asked PRChina to pay up - in USD?
@@slypear it's not going to happen because china is not self sufficiant, they would cripple them self more than the US. But I do not understand your point. China has enough USD to pay in your scenario.
@@zusammeneinganzes8751 Certainly China does have a lot of USD, but I'm wondering how much they would have if market rates changed not in their favour - and how long they would last.
Frankly I think each country can and should do whatever they can to try to make their own country better unless it breaks some sort of treaty or something. The argument of "[Country] should not do this because it doesn't benefit me in [not that country]" is dumb as rocks.
Oh man the stupid in this comment... The idea is everyone benefits more if everyone is honest. I'm guessing you don't know what a prisoner's dilemma is but you can think of this like a prisoner's dilemma with 195 different players
Yeah exactly, but 'Merca think they are boses of the world. China do what it wants with its money, it does not need to 'hide it' from the US like a kid hiding something from its parents lol
Currency manipulation is a behavior that indicates a willingness to betray the interests of foreign investors. It makes foreign investors nervous that the Chinese government could implement capital controls like Russia did, trapping their investments in China. Essentially the US is complaining that China is selling its-self as more investor friendly then it really is. This is an argument it is making to major investors, in the hope they shift their investments to the US or US allies. But yeah this argument is purely for global investors. From the perspective of your average Chinese or US citizen, the government being willing to manipulate currency puts your interests before foreign investors, which is a good thing.
The creator is mad that China hasn't privatized their banks like in the US where billionaires can them drain money out of the system to hoard away from the general population that would spend the money on things like houses, cars, or food.
11:00 - 11:14 Singapore has been doing that for many decades simply because we have no internal market or natural resources of our own and needed to invest outwards into profitable/potentially profitable companies in order to generate future returns. For Norway and Kuwait I think it's because of their reliance on hydro carbons which they know wouldn't last forever, so they needed concrete plans to diverse their oil returns to hedge against the day when their reserves run out.
Which is very stupid, because the only thing that keeps to Dollar worthy is global ZOG-Terrorism to pay for commodities in Dollars. When commodities aren´t paid in Dollars anymore, so goes the artificial uplifted Dollar demand.
@@alexanderivkin7086 the values of the investments we made are denominated in dollars. But in the event the dollar loses its dominances we can just re-negotiate based on the next dominant currency, be it the yen or euro.
Rules are just guidelines. On the international stage, its only a question of who will stop you. America has enjoyed the benefits of this for decades and now it's China's turn.
But doesn't this create more demand for USD? And the demand for dollars is what keeps it the world exchange currency? I thought a stated goal of the CCP was to undermine the USD as the world currency. Genuinely asking, I am probably misunderstanding something.
Does this change anything regarding their gdp being 60% lower? I mean, does this mean that decades of stagnation/very low growth are not so inevitable, or no? Ehat exactly do these few trillions imply? It doesn't seem that much compared to the 25trillion u.s. gdp f.x. I don't understand why this is so significant(?)
This is significant on the international scale, less so on the Chinese domestic scale. I would say the main implications are that China's currency is less vulnerable to a run than we thought and that this might endanger belt-and-road countries.
@@vinhbao9738 I think the whole demographics thing is a bit overblown, although I don't think it's irrelevant. Basically, if you raise the retirement age, you solve a lot of the problems. Surely, people won't be able to perform as well at 67 as they can at 40, but they can simply go back to slightly easier job positions then. F.x. a surgeon can go back to being a general practitioner at 65 for another few years, and a manager can go back to doing regular tasks of that department. Practice also shows that too many children cause more issues. This is why many African countries are developing slower than the likes of Romania and Bulgaria. Their gdp grows, but so does the population, and those kids can't really contribute much just yet. The best option is 2.5-3 children per woman, like Israel. But immigration is generally bad. Either the immigrants will have more kids than the locals and make locals become a minority in their own country, or, as is usually the casez they will also end up below the replacement rate in the next generation. The whole fertility thing is mostly a product of feminism. If women are told to focus on uni amd careerz they will do so, and postpone children, or even not have them at all. Israel is an example of why the degree of development is not so important - it's just a cultural thing.
@@temporelucemtenebris5313the demographics problem is not overblown considering japans economic struggles. And you do not take into account the very or maybe even extremely difficult task of increasing the retirment age. Just look at france, and even if china doesnt have a population as prone to protests as france they still have a government that relies heavily on public preseption unlike western democracies. If the chinese state increases the retirment age then there only one party to blame and no new parties can be elected as in a democracy.
As the world de-dollarizes, China should be buying gold with those 'hidden' reserves.. It is already selling US treasuries and buying gold. Right now, the RMB is losing value and the dollar is strong. (because the US is raising interest rates).
You implied that not just China manipulates the currency but also countries like Norway and Kuwait, and the animations highlighted Germany. I was curious if you meant that all these countries manipulate their currencies? Is the Norwegian sovereign wealth fund a type of this currency manipulation as its main purpose is to invest the foreign currencies Norway receives in foreign assets rather than converting it to NOK?
Trillions of US dollars of bond buying and economic relief packages by the US government to support growth and encourage inflation have already resulted in significant depreciation of the US dollar against most currencies and the slide is expected to continue. Europe and the UK have taken similar measures but not as extensive and there seems to be rising sentiment that both have to match the US to prevent further gains against the dollar. Doesn't this make the US the largest currency manipulator?
Yes, and right they are. That way they avoided the 'Dutch Disease': killing off normal sectors' competitiveness by 1 sector that drives up the currency (natural gas). Oil and gas in the case of Norway. The case of China is different, because they have a very diverse economy (and are much bigger), therefore these tricks distort global currency values. Germany's trade balance problems are absorbed by the weaker Euro-countries, causing Dutch disease like symptoms there.
Nope. Not at all. People always invest extra cash this way. It's part of basic human nature and goes as far back as civilization itself. It's just, to you people "China* is the enemy" and you need newer and newer stuff to accuse them or justify some protectionist BS. *China and a few others.
As a non-economist, I find elusive to pin down the definition of currency manipulation. My reasons are as follow: 1. Fiat currency. Its value is purely because of manipulation. Gov insists you pay tax/fine/fees with that. 2. Currencies are products of central banks. (like music record copies, membership fess). It is a producer right to set any price like any other products, isn't it (even if it is a wrong value determined by God). 3. Both low and high currency values and their both pro and con . Not a one side is always better but just a trade off. How well one manages its chosen position is more of a deciding factor (Swiss currency is strong but they seem OK until CS but still)
Some say it's china's business what it does with its earnings (and be opaque about it). However, isn't this policy really part of an industrial policy that can be likened to the "beggar thy neighbour" policies that were "popular" in the thirties? (And that did not really serve world peace.)
China is Manufacturer..so they can move this way without bankrupting any country . Those countries will be buying Chinese brand products instead, which will still be China's gain..
@@calvinblue894 Not sure what you mean. In what way is this different from a beggar thy neighbour policy that has governments actively advance domestic over foreign production? (And what do you mean with China is a manufacturer? So are the US and the EU. They even manufactured more before China started its export oriented "industrial policy", which underscores my point I think)
@@Ed-bq4rp It's different..you just don't see the plot.. In China's positioning as a Manufacturer, West defame China companies.. Every company need customers to evolve, chinese companies need customers to be competitive. Just think Japan if they were blocked back then. Japan undercut the West, so does China. But the moment Japan products became better, they sold higher prices. West blocked China from that and threaten to pull companies out.. endangering China. If companies all pull out, China will swing back to poverty, and population cannot take rich to poor direction and will revolt.. that's West plan. So..China play a different strategy..to save itself. With these countries dependent on China, they will buy Chinese products and help China move forward without West endangering. See the plot?
To be clear, youre asking why major international trading partners should be open and honest with their finances? Or what impact not doing so has? You actually need that logic spelled out further than it already was? Just kinda glossed over the whole video and skipped to the comments? When the answer was literally 30 seconds in?
China "should" not. However, this policy of hiding shows bad faith on china's part. So the real question would rather be, why is china not at least honest about its industrial policy via currency manipulation.
This whole video just thickens the question: why the hell are banks all over the world private? China fail-proofed its economy with state-owned banks and increased their influence, power and economy while doing so, showing it works better than privately-owned banks. In any other country this wouldn't be possible.
@@MajorGarland there are private banks in china, but the ones he talked about in the video responsible for the economic maneuvers depicted are state owned. list of banks: en.wikipedia.org/wiki/List_of_banks_in_China
Correct me if I'm wrong, but it seems like meritocracy is valued in Chinese society. Your leaders are all well-educated and experts in their respective fields.
@@evilleader1991 I was not born in China and never grew up in China. In fact, I am fourth generation overseas Chinese, so Chinese politicians are not "my leaders". I just made a remark that Chinese politicians made preparations to stave off sanctions (in case they occur).
Didn’t the FED deposit large amounts of USD in banks FED accounts which couldn’t be moved (exchanged for foreign currency) but used as collateral to help stabilize the banking system? Sounds li be ke China is doing the same thing but with USD rather than just printing their own currency … why would the Bank of England not have the same ability as all other central banks? Perhaps economists just don’t get banking in any system.
I wonder if the whole CBDC push is really about this issue and nothing else. In any event, it makes sense for China and other countries to do this with the US dollar. If that's the reserve currency then it is, and they should manage it as they see fit for their own interests.
As I see it, China did not hoard their dollars but put them to use in the Belt and Road Initiative, which simply is an infrastructural investment. That is what is the west should do too, rather than sinking huge amounts in defense and wage constant war, which is basically the least beneficial production and the least useful consumption: Government consumption. Meanwhile, we let the infrastructure, free markets, social coherence and fabric of our societies go to waste. Maybe our economist could look at that, instead of letting themselves be used in the blame game.
Big enough to raise concerns about China’s preparations for potential “conflicts “ in the near future. The way money works is simple, “the quicker it’s made, the quicker it’s spent!” Can you imagine what the Chip restrictions are doing to its growth industries.
So the basic conclusions of this video are: (1) it is better to have a meritocratic system where the leaders are well qualified for their jobs and have reasonable leeway to do what they're supposed to do, than a system where two (or more) parties spend all their energy tearing down each other with megaphones all day, with billionaires spending obscene amounts of money buying politicians; and (2) it is better to have a strong central government that can act in the national interest, than an alternative model which says all forms of government are a restraint on people's maximum freedom and government must be drowned in a bath tub. Got it! I knew (1) and (2) were true all along.
Bro you sound like a smart Indian and you are spot on, I wish my country have real politicians who can act not for themselves but also the interest of the people. I don't really care if you are a thief or a god, I just need to provide for myself and family and I am your believer.
@@thetaomega7816 Oh yeah little anchovie, Have you heard of Animal Farm ? They refer to a trick called scapegoating to distract from the real issue. China has become the scapegoat to divert from all the waste and corruption happening in Murica. Where did those billions sent to Ukraine go ? Could healthcare and homelesness be solved with those billions instead ? For sure, but scapegoating on China makes it easier to steal those billions under your nose , right ?
Most concerning isn't that China can covertly manipulate their exchange rate, the balance of trade, or defense of their currency. They have the power to seriously damage the value of the dollar, which must retain its value to remain the world currency. The last thing the U.S. wants is dollars coming back to it. It is their number one export. It would have a huge opportunity cost for China, but it's a nuclear option.
China should create an organization similar to the European Union that encompasses the BRICS countries and promotes their economic influence and friendly business relationships. Through this organization, they can initiate business activities among themselves and within their own countries, benefiting everyone involved. By countering the hegemony of Western countries and moving away from their exploitative practices, these progressive nations can not only thrive but also advance rapidly in their own respective ways. It is crucial to expedite this process.
I would like to know what international law or what authority China's money policy is breaking the rule with? Probably none? "Hiding" isn't it in this case not illegal?
You asked for opinions,so… You are totally wrong to blame China. China is using their money for global cooperative infrastructure projects and one effect of these investment projects is the stabilization of their currency value. Implying that China is working on global infrastructure just the keep their currency low, ignores China’s culture of cooperation. China is all about win-win situations, unlike the Americans.
I find it very difficult to believe that the US at least covertly didn’t know what China has stashed. There isn’t much that isn’t tracked at least in a general way of outstanding capitol.
I wholeheartedly concur with What they need is just their hegemony. One of the most prominent instances of this is the lengthy history of colonialism in Western nations. By plundering and looting other countries, they have expanded their empires and grown via exploitation. The present global financial structure, which goes by the titles of the IMF (International Monetary Fund) and the World Bank, was established when colonialism was no longer seen as acceptable. These technological systems have frequently been created at the cost of developing countries in order to benefit Western nations and their financial interests. It is disappointing to see this predatory behavior continue for so many years. Sadly, not much has changed from the outdated colonial structures, and these discriminatory practices still exist. And here is nothing new to say Western countries back its Shameless title!"🙄🙄
Without colonialism Europe would still be feudal, as there would not be enough wealth for any other social structure. Africa would still be a dark continent. Perhaps you would prefer the world that way.
@@alanjenkins1508 Just as you disagree with your perspective, just as you also discover what you want! If you don't understand You must be tougher in your pride, I assume you get what I'm saying, since what's happening doesn't mean the world is going to end for you, utilize your head! Why on earth are you here, then? To visit here and make such remarks is quite strange. Well, I must say, I feel really empathetic towards your unique mental condition! 😄
I have heard most of the Chinese debt (central or local) is kind of “constructive debt” which was spent mostly on infrastructure development or asset procurements domestically and internationally (BRI) to develop positive incomes in coming years although the number spent over years is huge ,about 320 trillion Chinese yuan, i.e. 40 plus trillions US, some examples are high speed train network construction of 42 K currently , 3500 kms each year now to reach 70 k in year 2035; ports, highways, bridges, 5G or 6G network, green energy network constructions, rare and essential industrial mineral assets procurement in Africa, South America and everywhere else including lithium, copper etc. They are not spent on welfare, direct federal funds to public public or military budgets to consume, so they are “smart debt” in reality. What’s more sad about the spending tragedy of US is only if it can spend $6 trillions in Iraq and Afghanistan war in domestic infrastructure and high tech, natural resources and education instead. It certainly required long term strategy instead of the 4 year election campaign goal.
Debt can be unsustainable even if it's "constructive". That's why BRI lending to most countries have declined after China spent so much. It's also why the real estate crisis occurred in China despite the industry building so many homes. There is such a thing as too much and diminishing returns.
@@100c0c Sustainability is exactly the biggest problem of US, it’s meaningless without checking the net asset balance by comparing total debt and asset, via a report of McKinsey Global Institute in 2021, China's net worth reached $120 trillion in 2020 to overtake the U.S.'s $89 trillion. Second, China Gross Savings Rate was measured at 45.9% in Dec 2021, compared with 45.9% in the previous year. Comparing US Gross Savings Rate was measured at 17.8% in Dec 2022. Third, China Total Deposits was reported at 38,665.054 USD bn (386Trillion ) in May 2023. That McKinsey report also show China had in 2020-21 surpassed the United States becoming the wealthiest nation in the world.
There is really no Chinese debt because the lender and borrower is ultimately the same entity as the debt is internal. There are no interest or principal payments and all debts can be wiped off at any time. The excess capital from exports/imports, after meeting all obligations, is allocated to internal infrastructure, critical industries or BRI. China doesn't owe any foreign governments any money.
Man these Chinese are so smart and clever. I have a feelings countering them won't be like Soviet Union, they are too far sighted and their every moves are like a chess.
Because their socialistic views and system make them act differently, for example, socialist country with communist goal always want to lift up the living standard of poor people by industrializing these poor countryies. Profit-driven Capitalist country would never want to do that since it would bring them no quick profits. Since their capital are privately owned by the capitalists, they would never have the incentive to help lifting up the living standards of poor people. China literally becomes a rich socialist country with communist goal and with a big war chest in the State's hands, not in individual capitalist. They would use that big war chest to serve their socialistic or communist goal, but not in Soviet Union Warmongering style. They certainly have more ambition and intensions than capitalist countries to help poor countries on the road of industrialization. But Chinese socialist government do in a more sustainable manner than Soviet Union did. So what I actually means is that Chinese find a way which serve both their investment needs ( using the dollers ) and their socialistic needs ( helping poor countries achieved industrialization)
@@directxxxx71 What? So PRChina somehow invented socialism under the pretext of Western Marxism? Get a friggin grip, man~ Like nowhere else has better functioning socialist governance than a totalitarian COMMUNIST country than PRChina?
In the light of US sanction and Freezing of Russian reserves all middle power nations are looking for Other reserves than US dollars. Including Saudi, Brazil, South American Nations.
Every country has its own monetry policy. Most countries make it illegal for private entities to hold foreign currencies in CFC accounts after a specific grace period as they can then potentially speculate or manipulate their local currency. The US to fund its war behemoth has chosen the route of debt accumulation/levered funding. Thereby accumulating their debt eventually into an unsustainable level. This will come when China has a substantially larger money supply than the USA & its military might is much stronger to weather an ailing US attack who continues to fall every year by investing more into defence with diminishing returns as it holds up phony wars to feed its bloated military industrial complex. Moveover, another latent play with China is to substitute the dollar with its BRICS partners. If the BRICS nations manage to sustain growth levels over 6 or 7% in the next 50 years they will replace western Europe as the counterbalance of the world economy. Brazil has wonderful potential if corruption, even wealth distribution & CIA meddling is routed out. Russia is a question mark, the oligarghic system ensures that there can never be real sustainable growth as national income is spread amongst the top with scraps falling to bottom if possible. This diminishes a strong retail market which is the lifeline to consumption activity in an economy. India is rising quite well but still has to uplift its masses from abject poverty to empower the masses to reach developed country status regarding economic consumption ratios. It has issues with poor manufacturing quality with high tec & industrial machines. (At least one generation behind in producing hitec, high yield products.) Their motor industry or yellow goods market personifies this. Sweat shops are the prevailant growth market. This is a pseudo sustainable growth as an increase in household purchasing power will drown this type of industry. Next is the severe brain drain as wages for professionals are low due to there being an oversupply of professionals and great disparity in income & wealth holdings between industrialist elites & the growing middle class. Indian elites refuse to share. Poor national infrastructure to improve supply chain lags & ease of business. Bureaucracy & corruption plagues India. South Africa has all the hallmarks of the 3 former. Infrastructure & business framework in South Africa was excellent (1st world) but the but awful oligarch rule over the last 20 years has placed South Africa in a role more & more like Russia so it also a "question mark." to realistic future sustainability. The USA is definitely on its way out. The question is when, how & most importantly what cost to humanity.
The CCP has a demographic problem Say you got a dumpling shop. Say you got 10% less customers and the customers are older. (older customers eat less) Will business be better or worse? The EU and Russia have demographic problems and the global south doesn't have money. Less individuals = less domestic consumption = less money for CCP companies = bad economy = less money for the CCP government = less money for the CCP military.
@@jonathanaustinstern1 Agreed. However the same logic applies to US hegemony which is already on a slippery slope due to its foreign debt and constant deficits due to tax cuts for the rich & maximum defence spending. Inequality in the US & many other OECD capitalist countries have been steadily rising. The super rich are not going to buy cheap dumplings but champagne & kobe beef or more likely binge on cocaine & cat to stay thin. I am not a fan of the CCP nor the US because they are both despotic & contradictory regimes with different marketing & packaging consultants. World War II taught us much about humanity & greed but people are fickle & vane. Capitalism rests on a proviso of infinite growth, which we know is unsustainable. I have been fooled once by Reaganomics & Milton Friedman. I have my whip lashes to prove it.
@@louvendran7273 Yes Americans don't live well. Yes Americans are not happy. That being said The CCP and Russia fail before the US The EU is facing demographic collapse and the end of globalization they fail as well Anyone else going to beat the US?
South Africa has massive structural problems and is basically a failed state in most respects. And India's Jaishankar has denied any BRICS currency. BRICS has always really only been China, it's a Chinese institution pretending to be multilateral. The biggest problem for many developing countries will probably be climate change and its effects moving forward.
Reserve or central banks do not need to keep their reserves in US-denominated products. Many of these central banks keep them in other denominated currency bonds like Euro or gold. So far there is need to declare your gold holdings.
They've been buying gold too. Their reported gold reserves are reportedly far lower than they should be given the amounts they have bought. I wonder what that's about? I see Chinese state banks were using $ to buy Yuan yesterday (Thur 20/7) to support the Yuan.
The US has around 4 times the gold reserves of China. The EU combined has more than the US. It's not likely China would be thrilled about going to a gold reserve standard. They really haven't been accumulating much of it, anyway.
@@MrCarlGW Going to a gold standard is not a competitive move against other gold holdings. It doesn't matter how much gold other countries have. It is merely a standard. And, curiously I never referred to that. So your denial is telling. _"They really haven't been accumulating much of it, anyway."_ Total rubbish. Either get informed, or stop trolling.
@kevinu.k.7042 You aren't informed and make no sense. If gold us the standard there will be a value assigned to it. The more you have the more it's worth. Look at a chart of gold purchases by China, too.
@@MrCarlGW There is an international gold market and that is the value of gold at any given time. No, the more you have does not make gold worth more. As for Chinese gold purchases some work was done by an American economist. He compared the amount of gold purchased on the open market over a few years to the CCP stated Gold reserves. He showed how the stated gold reserves did not reflect the purchases. I've now muted you because you resort to aggressive posts when there is not need. Trolling.
You touch on this aspect briefly but I think we need to stress more how permanent trade surpluses are detrimental to China and profitable to the US. The end goal of the Economy is to provide consumer goods. Saving, investing and exporting must be done but only to serve the final goal of consuming. A powerful nation takes away brains, capital and consumer goods for the rest of the world and gives worthless debt, ever expending until it pops! When the West took away Russian dollars/euros, they basically took the gas they received in previous years for free and Russia lost its gas.
@@ThomasVWorm I agree (also, their economic openness/servitude allows them to learn/spy on Western technologies) but at some point, China will need to find a financial and commercial way of turning this enormous trade surplus of consumer goods from America to their own people.
@@ThomasVWorm I agree with the general idea, although it is not even about "fair distribution", the goods they send to the US are mostly given away, like a tribute.
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Hello. I love ya! My question is:
What happens if China dumps those dollars to the world market for goods and services during a SinoAmerican war over Taiwan?
Or more to the point, how can they use dollars against USA?
Damn china is really faked their state treasury, they're much richer than any states in the world amazing
Also did you say market monopoly as crime while also showing other 'west' country doing the same?? 🤔
That's very interesting half truth propaganda method, i must write that
Great video on a recently very interesting topic!
This seemed a lot less critical than your usual videos, especially considering the sheer size of the claim.
I love it when you the west still think you can control China. And China loving it too.
And also, when you the west thinks you cannot be controlled by anybody.
Would love to see more videos on how nations are "sanction-proofing" their economies by building redundancies, seeking to "de-risk" their economies etc.
I agree with you , that would be interesting and helpful .
That's correct. These Westerners still think that other countries have idiotic leaders when their leaders are demented.
As someone who lived through a sanctioned era. It's a "cluster fudge." In Apartheid South Africa the government tried to go it alone like Hitler.
South Africa was the leading producer of gold at the time with its signature gold coin being the Kruger Rand (1 ounce fine gold) which became illegal to hold/tender in sanctioned countries. Exports were commodity based with a developing manufacturing sector at the time. South Africa like the Persian Gulf, modernised on the back of commodity revenue. It also created a rich English & Jewish oligarchy with the Afrikaners retaining political control as their demographics was the largest among the European & West Asian settlers.
Apartheid had a weird path of categorising people similar to the Nazis as by default Jesus was an asian and thus a non-white. There were Persians, Turks & other west Asian muslims who were considered Indian (Islam is a semitic religion btw) with Jews & Christians from these lands were considered white. Moreover Japanese, Taiwanese & Philippinos were considered white but South Asians, Chinese & South East Asians were considered black/non-white.
The 1980s saw the repeal of US & non-Axis powers' capital withdrawal out of the country. The first hit were the sweat shops who were heavily subsidised to supply the local market with cheap goods as only The UK, Taiwan & Israel were friendly to trade. Germany & Japan had no foreign policy so it was trade as normal. The prices of imported goods increased as the Rand slid. Interest rates hovered around 20+% during this era to attract foreign capital. Sanctions broke the back of the South African Apartheid government as they ran up several budgetary deficits in the 1980's compared to surpluses post war when foreign capital poured in to take advantage of the metal boom in the old Transvaal and slave wages to non-white workers in manufacturing plants. The international motor industry benefitted hugely from it during the wage discrimination era. Today its just called capitalism & prudent cost control.
I haven't spoken about the South African Industrial Military Complex as it is another long dragged out debacle with a whole load of hanky panky going on. There was a civilian plane crash "The Helderberg" which was potentially guilty of carrying Military supplies on a civilian craft.
All that loss of life, black on black violence, white & skilled flight out of the country etc for a Russian type oligarchy with all the trimmings supplied for free to rule the country as a "stable western style democracy." The police state affectly defunded & privatised for personal security. A defunded crimminal & civil judiciary to drag on court proceedings to bleed the disputed parties. Furthermore our host is a research fellow from a sister University of mine, UCT. He can audit my experiences with empirical evidence & referencing scholarly journals of the events as they unfolded and were studied & documented.
@@louvendran7273i have no idea who you’re replying to but thank you for the history lesson on South Africa I found it super interesting.
It seems to me from afar like the current leaders of South Africa are extremely corrupt and sadly even worse statespeople than the government they replaced, who were oppressive but at least kept the electricity running.
Do you feel that the current government is fixated on replacing white and asian officials with black officials for historical grievance reasons and that this is causing a talent deficit within government institutions? That is the perception I’ve heard and it seems accurate from afar but what do I know lol I’m Canadian.
@@AT-nw6crhat a load of BS. They were also incompetent just as the current government. The electricity they kept running were used to service 10 percent of the population. It not so hard to service 10 percent while leaving 90 percent in perpetual darkness and poverty.
''Hides trillions from America'' t Do these trillions belong to US? Are they obliged to declare them to the policy of the world?
❤Precisely well said
Wait so China was ploughing it's dollar reserves into foreign infrastructures investments? And this somehow slipped through the attention of US economists?
How exactly did they think BRI was being financed?
It's just that it wasn't really seen in the same context as building up official reserves.
Because they are dumb by creating Debt trap narrative when china is thinking much ahead of western economists and policy makers.
Exactly, completely misleading title. Every economist knows the dollars were being invested as infrastructure instead of being recycled back into US economy as treasury debt purchases. This is literally the single biggest reason for USA turning on China. Check the timelines.
if they're spending it, it doesn't count as reserves as its no longer theirs.
this video is misleading
@@zenastronomy Bingo, another title playing into the China fear. It is fast becoming really really old. As a businessman who travels to China regularly. Let me tell you sth shocking. The Chinese ppl don't care about the US. They are too busy growing their country.
Smart move. I wouldn't say they're hiding anything. They're doing what works for them. As you said, this is advantageous for exporters.
I don't see this as a bad thing. Instead of holding a bunch of US bonds, they're just buying assets/bonds from third world countries. It's China's money. They are free to do what they will with it. It's risky as well since a lot of the BRI projects aren't holding up well after the pandemic. It also helps third world countries develop their infrastructure.
This is an oversight on part of the American economists since Chinese reserves are increasing but is there anything US could have done differently? Like I said earlier, this is China's money. Unless the Americans want a repeat of Russia SWIFT sanctions, (and all the implications of that action except with China) the most they can do now is to reduce the trade deficit with China and bring more manufacturing back to the US. They're already doing this.
if they do that then they need to abandon the dollar as the worlds reserve currency. which means they need to abandon the US military empire, as the pentagon budget military spending is funded through money printing due to the US dollar being the world's reserve currency.
the US can choose to bring manufacturing home and abandon it's military empire (doubtful Israel will allow that).
or it will have to accept having a trade surplus with china and the world.
But can the Americans work on a 996 work culture?
If not China will continue to dominate 😂
@@Cheesecake99YearsAgo The 996 work culture isn't the brag that you think it is. Chinese workers are less productive in terms of output value than American workers despite working longer hours.
Also working longer hours like that means that there is no work-life balance. This means that there is no time to raise a family and consume. Regardless of the mental toll this creates, this a recipe for disaster for the future. It is squeezing dry the potential of the present at the cost of the future.
I may not be a fan of the CCP but I honestly wish well for the Chinese people. At this rate China is going to become like Japan except worse since China wouldn't be as wealthy as Japan.
@@theworddoner most poor Americans work 2 jobs 60-70hrs as well.
both countries are quite messed up.
but china does seem to be tackling issues, building houses, sanitation, hospital, universal health care, etc.
so ppl there have hope.
i suspect the 996 culture will end once ccp thinks its harming the country more than helping.
@@theworddoner Not according to the Tesla CEO speaking on his factories who said Chinese workers are both the most efficient in production and produce the highest quality relative to his other factories in the world. He's been quite critical of American workers. Musk's metrics would imply that Chinese workers are more productive in terms of output value than American workers for equal hours.
Simplification alert: the way that reserves end up at the central bank in the examples is just the simplest example. In real life, in case of a surplus, banks or exporters might immediately sell Dollars and in that case the central bank might actively buy them 'back' on the open market. This achieves the same effect. But, is 'active' (rather than not selling reserves). In the end, the effect is roughly the same. So, I chose to show it in it's simplest form.
It’s interesting that you talk about currency manipulation as a crime. Can you HONESTLY name a country that doesn’t manipulate its own currency? All countries are managing the level, but of course they need to balance various factors such as trade competitiveness, interest rates, capital outflow, etc.
Actually, you don’t mention that dropping your own currency hurts your the living standards of your own country. That is why you don’t see ALL countries just dropping their currency.
Money is of no value unless you spend them or has the ability to spend it. With the actions that US did against Russia, I wouldn’t be surprised if China hasn’t used their dollars to buy gold and have the remaining treasuries serve as collateral against gold that they lease. This way they are somewhat insulated against currency sanctions by the US.
I mean it's not like u haven't watched this channel long enough to figure out after a while this channel has a bias and agenda....especially in whitewashing western especially American economic transgressions and past......
The way he made it sound like currency manipulation by China is a crime,like as though america has not manipulated its currency hundreds of times before,and engage in economic strong arm tactics,sanctions and wars to coerce or even cripple other countries economies......
It's one thing if u do things defensively to protect or preserve ur own country's integrity it's another when u do it vindictively just to sabotage others and even drive them to the brink of collapse just to undermine them,then on some misbegotten act of faith of humanity,the ultimate act of shadenfreud u send the imf in on some false act of "altruism" to bail them out on the condition they change and subvert their laws to allow america a greater deal of control and power from within.....
Just ask Thailand and Malaysia and south Korea in the 90s......Malaysian pm mahatir had some choice words for america during that fiasco.
Mahatir and Gaddafi is right,america is the spawn of the devil....
And don't forget us Japan trade wars and plaza accord and window guidance in the 80s.....that ultimately led to one of the most productive and prosperous economies demise......
Most people in the world have no idea of Americas true level of vindictiveness and depravity....
@@normankoo6159 He never said China did something wrong. He only said that we should also look at other things than central banks' forex reserves when we make conclusions whether a country is manipulating their currency.
Now who created the IMF & the world bank?
How many country is in debt to it?
@@MajorGarland There is a huge connotation difference between manipulating vs. managing. I dislike the hidden bias in the choice of words. It’s no difference to how the US uses terrorists vs. freedom fighters. As any educated person knows, the management of a country’s own currency is critically important. So, why use the term manipulate??
I like these "journal club" episodes. keeps us up to date and promotes discussion
England stole 45 trillion from India, America stole 7 billions from Afghanistan much easier
Hey Joeri, could you do a video on the Asian Financial Crisis of 1997? It was this event that made the Chinese government pivot towards buying US Treasuries significantly.
Not only China but many Asian countries as well
It is definitely on my wishlist. This crisis is not talked about enough while it had huge consequences.
@@MoneyMacro especially for japan
@@kekbin1697 Japan had their own crisis 6 or 7 years prior to that, they weren't really hit that badly (if at all) by the Asian Financial Crisis.
@@MoneyMacroI've read Naomi Klein book shock doctrine
It's explained terrific
You are a good story-teller and the way you present your information makes it easier to understand. Thank you for these awesome videos.
as you point out, it seems like the chinese are just doing what many other countries are doing, but on a larger scale
this is only a concern if you're an anti-china hawk. i, however, like you, am a nuance enjoyer, and so prefer to think about how to update frameworks and priors
The problem isnt "anti china hawks", but rather chinese warmongering. They managed to threaten - and in some case kill people in skirmishes - an entire series of neighboars, and are stuck in a mindset of having to conquer and subjugate Taiwan.
And thats besides all the constant cyber attacks, spionage and criminality from China.
Even beyond that, China heavily using and being able to influence dollars is important to know for America. Theyre manipulate the market to get themselves an advantage over others.
Therefor its pretty relevant how China is preparing for conflict, just from common sense.
Not only that, but China is not really hiding. Western economists just quite don't understand the chinese economic model as they try forcefit it into their models.
@Itsunobaka musical chair game
China is also buying gold in large quantities. If they use USD for it, they also lower their foreign exchange reserves, without actually lowering them.
There was another analyst who claimed China was printing money, to keep its currency down. This usually has the effect of lowering the currency value, but in this case, it serves the interest of CCP,
It's not good for US, the Dollar is used in favor of US big banks but against the geopolitical aspect of US. China has cracked the code of the game and uses the Dollar against US. What's the plan? Collapse of the Dollar you will say?! CBDC are one horizon, tracking, monitoring, fine tuning, all the good stuff!
I hide my money from America as well, specifically the IRS, although for a far pettier reason.
😂😂
FBI open up
You must be someone who says "Merica #1", but find any raisons not to pay your fair due taxes. Bottom line, you don't care about your country.
@@QuantumBoyMacaufsb shut up fbi
@asterixky Great point. Now do cronyism
Is this hiding reserve or is it simply government spending?
Depends on whether or not the Chinese government can get the money back easily
the "reserve" context was probably an unintended positive consequence of the spending
If it was just spending then this would not be new information.
@@jankrottendorfer475 not easy. if something happens countries will confiscate all of it
Still not sure what was wrong with what they did. If they want to stash money, so what? If they want to channel it to development loans, so what? Why can't they do that?
I'm honestly impressed by the time and effort you put into these videos ... Pls keep it up! 👍👍👍
The CIA will has plenty more of these videos to help polish your smooth brain. 👍👍👍
Can you make one video on the uncovered interest parity and why it does not work? I know, it is a bit more theoretical. But you make great videos and the topics you describe are very understandable because of you.
China's centralized economic model is working. We know this by how badly the US' decentralized economic model is failing to compete against China. Which is why this video was made to blur the lines of reality.
This is only the half of the story.
The Bank use these excess dollars to invest in infrastructures in developing countries (usually at a very delicious prices compared to the West and are of course good for local ppls). In return, China doesn't want the currency but specific mineral resources or agricultural products or the right to operate ports, and the money goes back to China as actual goods but not green papers.
The US is now realizing that there is no way to plunder China's wealth through monetary policy as it does for many years. It's like a wheat field full of rebar. A scythe will only cut itself off.
yeah, the Pakistani people are "loving" the "aid".
Issue is that in a lot of cases it is not good for local people at all. There's numerous cases where Chinese companies do not employ local people within country but instead brings their own people in for the job.
@@tyronbasista2729 If not better, at least not worst. Go to one of those contries and see how those infrustrutions do good to ppls lives. Why ppl always keep thinking those contries are all sptuid enough to harm itself?
@@Jyryp Its not thanksgiving and I believe the leaders in those contries are not all idiots. Besides, if there is a better deal, the Westers could have done it decades ago. So, its the best deal so far.
@@ZLU-fc2ki cuz corrupt government. i live in one of those countries. i know the corruption, and the powerlessness of the people against the corruption.
Put simply, China puts those dollars to work by buying/building/investing in roads, rails, ports, infrastructure which drives economy both domestically and globally. Instead of sitting on it, or getting interest on it, wow who'd have thunk 😂
Problem is as he stated. If they sell it all then it can cause widespread problem for the domestic countries of said infastructure
@@originalempa7037 Increasing infrastructure can also attract investment.
@@originalempa7037America bombs infrastructure and imposes sanctions on third world countries that refuses to let its elites loot their natural resources. China build infrastructure. How is it a problem again? And yes, I am serious. Name me one project the West built in 3rd world countries that makes their people better? All I get from westerners are lectures and sanctions and exploitation from Wall Street
@@originalempa7037I would argue that you do not understand China. It is questionable that it's in China's best interest to ruin any country's economy, they are the top trading partners for over half the countries in the world, but they still need to trade to keep their own economy going. Withdrawing any promised investment with the ones agree to participate in the BRI is a dangerous move will it hurt the local economy it would most definitely earn China a bad business reputation. End of the day, its their money, they can do whatever they want with it. Luckily they are investing in roads, bridges, airports, ports instead of military bases.
This is just shifting reserves from riskless assets to risky assets. It is just tunnel vision of neoclassical economists which made them unable to spot this.
Russia's 300B in riskless assets got stolen and is now 0B i riskless assets lol.
I had no idea American economists actually believed the Chinese numbers, thats so naive.
Chinese numbers are backed by the IMF, which is basically USA. The thing here is that western models of economy that are heavily based on private property and profit don't quite work on the economy of China, since their goals are not really aligned with the "rules".
Better to have inaccurate numbers than no numbers
I dont think they believed China.
@@tomlxyz well if you has no numbers you wouldn't formulate a conclusion at all - no conclusion is better than an incorrect conclusion.
@@matt69nicea ballpark number is better than no number
It is not some type of 'war' chest but rather defence chest against the 'holy see' of American central banks
美国就是这样，当你有能力保卫自己，美国会说你不够民主，当你有能力威胁美国，美国会说你威胁到世界和平。只有像伊拉克一样任人宰割，才会被忽略。
This was a great move by China, it managed to keep its economy competitive and also helped developing countries with infrastructure investment.
Are their billionaires going to Mars?
@@julianshepherd2038 are americas?
We don't care, those are vanity projects for the rich. Development and poverty reduction is way more important than a couple people going up to space
Helping is not the right word, goes more to be neocolonialism...
@@BolchevoluIistaWhen there's no better alternative what choice do developing countries have, Everyone else just gives humanitarian aid instead of actual development aid to improve our infrastructure and production capabilities. Then we are stuck in cycles of IMF bailouts which end in our recourses being exploited to pay back the high interest rates on the loans. That's still neocolonialism just wrapped up in a nice package.
Thanks for guiding us to this article. It's brilliant. The conclusions of the article aren't the conclusions of this video though. There's no talk about having to sell BRI assets to defend the RMB under any circumstance, and no mention of intended currency manipulation. I think for once Joeri made something look more controversial than it should be. I don't want to sound like a 'zijlijnpisser', thanks for the great effort!
The CFL is a political institution, he is an academic researcher, of course he comes to a different conclusion. He gave you an objective analysis, the CFL gives you an opinion. Both did what they are supposed to do. That doesn't mean the CFL is wrong (although they don't have the best track record), just that their opinions shouldn't be equated with the opinions or research of economists.
Good point Bob! Although that article is the main source for this video, I actually used many others and indeed draw slightly different conclusions. Maybe I should have been more clear about that difference.
@@MoneyMacro You don't have to do anything but be yourself. You're the sole sane economist on YT and we should all thank you for that. Personally, my wife and daughter are Chinese, so I'm extra-sensitive to China-related innuendo. Eg. attributing intentionality where there is none or using words like 'hiding' (the article says "those funds are - correctly - no longer counted as part of China’s official reserves"), 'scheme', 'currency manipulation', or implying that the US has the right to know exactly where all USD are once they enter international reserve status. China does strictly control capital and foreign exchange outflows, but there are very good reasons for this. It's easy to forget that during the '97 crisis, it was a source of stability in Asia exactly because of these controls, and we can be sure they learn their lessons from history. The redirection of USD from the bond market and the PBOC balance sheet to policy banks, commercial banks, and BRI funds I think has an enormous positive impact. As Setser seems to acknowledge. it further increases financial stability (with even commercial banks attributing to this), and the use of accumulated savings to fund production or infrastructure is the very essence of financing global growth. Forgive me for the long-windedness. Getting me started about China criticism is like getting a Belgian aunt started about her neighbor's messy lawn. Please be well, and off to 300k subscribers!
@@BobBogaert you have a more optimistic view of China's moves. I'm still skeptical that these redirected funds to the BRI program are a net benefit overall. Countries have taken on unsustainable debts to fund projects that won't cause enough economic activity to justify them. In the current market of food scarcity through Ukraine war and rising interest rates, some of these BRI countries will need to have their debt forgiven or reworked for a longer duration. Though if I studied and built a family in China too, I'd want to hopeful also. Though if your daughter is young, you're probably moving to Belgium for your daughter's education.
@@Nabrolo I'm sure some of the projects will fail miserably. That's a statistical necessity. I'm also sure the media will make the most out of these, that's a geopolitical necessity. But if we look back 10 years later I will be very surprised if any of the predictions of the 'death trap diplomacy' hold true.
As for education, I was asked that question a few times before, and I always answer that if I can survive 12 years of Catholic school and still think for myself, I trust my daughter to be able to finish Chinese education unscathed and open-minded.
It's difficult finding the balance between cynicism, skepticism and naiveté. I try to be a skeptic optimist, and so far that works. My best to your family. 保重！
"Hiding" is overblown. In a crisis or war, the Belt and Road projects are not readily convertable assets in a crisis which China could dip into for cash. They reside in mostly poor foreign countries which could easily seize them by "nationalizing" these projects. China has exactly zero expeditionary forces to enforce its ownership of these projects anywhere outside of its immediate southeast Asia region. Without this long range far reaching military force to enforce ownership, China doesn't really own these projects. And if it did start throwing its weight around in places like Africa or South America, it would simply be doing what the US did during the Banana Republic years of American imperialism.
In its early years as a third world country, China itself was quite clever at stealing capital investments from foreigners by simply removing official licensing or land rights to any projects that were funded by foreigners that displeased the CCP, thus "nationalizing" these projects /factories.
Thank you!! Excellent content as always.
If a Chinese exporter is paid in USD, they go to their Chinese bank, which exchanges the USD for Yuan. But what is actually happening is that the Yuan are being printed out of thin air and the USD are being kept by the central bank as additional USD reserves. In other words, the incoming USD are not being sold for Yuan but are being held by the central government even though they were being paid to the Chinese exporter. Isn't the printing of additional Yuan highly inflationary?
Racist loser
Doesn't sound like they are hiding anything
Policy making is based on simple principles of causality and interdependency. So no policy is made in a vacuüm. The amazing thing of China's policies is that they think long-term on some issues of statehood. And the west would do good to balance its messy policy making by taking example to that. Especially in matters of environmental change short term policies, thoughts on profit and loss, electability etc are recipies for disaster. If we can think and act longterm while maintaining our open societies and democracy that would be the best.
How can you call it secret stash when you detect it?
The US will have that amount if they had saved their money instead of using them on wars.
The long term planning and strategic policies of the peoples republic is mind boggling
its' what happens when you have a meritocracy and very very smart people running things (instead of cheerleaders in a popularity contest)...reminds me of high school student body the way the west is run
Trump's buffoonery was an embarrassment for the US. What happens now that China is losing it's ability to export? I have noticed that even manipulated state data shows a drop in exports.
It really funny that the US is accusing others manipulating currency.
China doesn't need to buy RMB to get rid of the USD, it can buy gold, and also loan to countries that is in need of USD.
These claims are a bit dubious. Even if China's numbers are opaque or distorted, the claims and research by Luis Martinez on China's GDP, which you covered, and this new claim, are rather roughshod, and its hard not to assume that they're politically-motivated to a significant degree.
Why are they dubious? What are the red-flags in the research?
For this current video, undervaluing your currency is a tried and true tactic that has been used extensively throughout history. However, it tends to invoke a counter reaction by your trading partners. So, it makes total sense to hide it. Also, as noted many other countries are doing this as well, China is just the biggest.
@@MoneyMacro The Martinez one I found rather dubious - serious limitations to nighttime light density as a tool of GDP analysis - this one I found much more plausible, but I find it hard to believe that China doesn't mobilize these "hidden" foreign currency holdings when faced with inflation at home, and the scale alleged by mister Setser. I feel like there are other plausible reasons why "state-linked" investment firms and banks working in a multitude of nations and contexts might want to hold dollars.
@@MoneyMacro By the way this is the best economics channel on UA-cam hands down in my opinion. I love these topics even if I'm skeptical of some of the claims in the papers.
@@rashid8646 China's inflation is very low, sub 1% if I remember correctly. They don't need to mobilise anything. Also, as the primary manufacturer of many components/finished goods, they're less prone to inflation, provided their input costs remain low.
@@rashid8646 This video is not about the Martinez paper. It's about a report/paper by Brad Setser, which is quite well-sourced and well-reasoned. I enjoyed it and found it thought-provoking.
Specifically, what/why are the claims and evidence that you object to?
I personally think there are a couple limitations, but it's as good as any of the research coming from Rhodium Group or WEF these days.
China is a great example for India to see how a poor country can develop
India is going to thrive, given the right management 👍
You wish 😂😂😂
Is there some good book you might recommend to learn more about macroeconomics? I'm a student of foreign affairs, but certainly I deem the material that I'm looking for should be written in plain language
Actually you just explained how the Chinese government is ran by very very smart people.
@JusticeNDOU smart = protected
More like smart economists.
I don't think it's that the Chinese government is especially smart, its just that Western Governments and Economists worship market forces and put the interests of investors before all else. So when a country doesn't respect these rules, they cry foul play.
I was alwwys imagining that China would at some point flood the market with all those dollars, crash the US economy and take over from there
Yeah, that's not gonna happen.
More likely the reverse *could* happen.
I mean, what if everyone in debt to PRChina holding USD suddenly asked PRChina to pay up - in USD?
@@slypear it's not going to happen because china is not self sufficiant, they would cripple them self more than the US.
But I do not understand your point. China has enough USD to pay in your scenario.
@@slypearhow can someone who is in debt to you ask you to pay in USD? You aren't making sense
@@zusammeneinganzes8751 Certainly China does have a lot of USD, but I'm wondering how much they would have if market rates changed not in their favour - and how long they would last.
@@Jkl62200 Because the terms of contract are payable in USD?
independent is another way of stating dependent on the status quo
Frankly I think each country can and should do whatever they can to try to make their own country better unless it breaks some sort of treaty or something. The argument of "[Country] should not do this because it doesn't benefit me in [not that country]" is dumb as rocks.
Oh man the stupid in this comment...
The idea is everyone benefits more if everyone is honest. I'm guessing you don't know what a prisoner's dilemma is but you can think of this like a prisoner's dilemma with 195 different players
@@jumbo_mumbo1441It looks to me like you two agree more than you initially thought.
@@jumbo_mumbo1441is the USA honest?
Yeah exactly, but 'Merca think they are boses of the world. China do what it wants with its money, it does not need to 'hide it' from the US like a kid hiding something from its parents lol
Currency manipulation is a behavior that indicates a willingness to betray the interests of foreign investors. It makes foreign investors nervous that the Chinese government could implement capital controls like Russia did, trapping their investments in China.
Essentially the US is complaining that China is selling its-self as more investor friendly then it really is. This is an argument it is making to major investors, in the hope they shift their investments to the US or US allies.
But yeah this argument is purely for global investors.
From the perspective of your average Chinese or US citizen, the government being willing to manipulate currency puts your interests before foreign investors, which is a good thing.
So my networth is not just the money i have in the bank but aldo IOUs im holding, my stock funds and real estate holdings. Isnt that common sense?
i like bad stories cause it gives hope to the losing side that they are winning
It's not just this. The same goes for GDP. There are a large number of figures that are not recorded in GDP
Purchasing Power Parity (PPP) is a more telling system to see the reality of the world.
Wait, so giving US goods for promises to pay is currency manipulation?
The creator is mad that China hasn't privatized their banks like in the US where billionaires can them drain money out of the system to hoard away from the general population that would spend the money on things like houses, cars, or food.
Thank you for this video. I was wondering about exactly this for a while, and I even asked economists and only got a nonsense hand waving answer.
11:00 - 11:14
Singapore has been doing that for many decades simply because we have no internal market or natural resources of our own and needed to invest outwards into profitable/potentially profitable companies in order to generate future returns.
For Norway and Kuwait I think it's because of their reliance on hydro carbons which they know wouldn't last forever, so they needed concrete plans to diverse their oil returns to hedge against the day when their reserves run out.
Which is very stupid, because the only thing that keeps to Dollar worthy is global ZOG-Terrorism to pay for commodities in Dollars. When commodities aren´t paid in Dollars anymore, so goes the artificial uplifted Dollar demand.
@@alexanderivkin7086 the values of the investments we made are denominated in dollars. But in the event the dollar loses its dominances we can just re-negotiate based on the next dominant currency, be it the yen or euro.
Is reporting incorrect stats on purpose illegal from any international ruling, or is it completely fine to do without any consequences?
Rules are just guidelines. On the international stage, its only a question of who will stop you. America has enjoyed the benefits of this for decades and now it's China's turn.
But doesn't this create more demand for USD? And the demand for dollars is what keeps it the world exchange currency? I thought a stated goal of the CCP was to undermine the USD as the world currency. Genuinely asking, I am probably misunderstanding something.
Nobody in their right mind will back the RMB, unless you're Russia, Saudi Arabia or South Africa (to name the most major players)
@@slypear They've been hoarding gold for several years now. I wouldn't be surprised if they go to the gold standard one of these years.
Brazil, Iran, Argentina, Egypt, central Asian nations.. Among many. Ore
You forgot one thing….they also stashed a massive amount of gold reserves too!!
Does this change anything regarding their gdp being 60% lower? I mean, does this mean that decades of stagnation/very low growth are not so inevitable, or no? Ehat exactly do these few trillions imply? It doesn't seem that much compared to the 25trillion u.s. gdp f.x. I don't understand why this is so significant(?)
This is significant on the international scale, less so on the Chinese domestic scale. I would say the main implications are that China's currency is less vulnerable to a run than we thought and that this might endanger belt-and-road countries.
@@MoneyMacro interesting. Do you think the Chinese economy overall has a bright future then?
@@temporelucemtenebris5313 In the long run, no. Horrible demographics. The next Japan (without being as wealthy as Japan).
@@vinhbao9738 I think the whole demographics thing is a bit overblown, although I don't think it's irrelevant. Basically, if you raise the retirement age, you solve a lot of the problems. Surely, people won't be able to perform as well at 67 as they can at 40, but they can simply go back to slightly easier job positions then. F.x. a surgeon can go back to being a general practitioner at 65 for another few years, and a manager can go back to doing regular tasks of that department. Practice also shows that too many children cause more issues. This is why many African countries are developing slower than the likes of Romania and Bulgaria. Their gdp grows, but so does the population, and those kids can't really contribute much just yet. The best option is 2.5-3 children per woman, like Israel. But immigration is generally bad. Either the immigrants will have more kids than the locals and make locals become a minority in their own country, or, as is usually the casez they will also end up below the replacement rate in the next generation. The whole fertility thing is mostly a product of feminism. If women are told to focus on uni amd careerz they will do so, and postpone children, or even not have them at all. Israel is an example of why the degree of development is not so important - it's just a cultural thing.
@@temporelucemtenebris5313the demographics problem is not overblown considering japans economic struggles. And you do not take into account the very or maybe even extremely difficult task of increasing the retirment age. Just look at france, and even if china doesnt have a population as prone to protests as france they still have a government that relies heavily on public preseption unlike western democracies. If the chinese state increases the retirment age then there only one party to blame and no new parties can be elected as in a democracy.
As the world de-dollarizes, China should be buying gold with those 'hidden' reserves.. It is already selling US treasuries and buying gold. Right now, the RMB is losing value and the dollar is strong. (because the US is raising interest rates).
You implied that not just China manipulates the currency but also countries like Norway and Kuwait, and the animations highlighted Germany. I was curious if you meant that all these countries manipulate their currencies? Is the Norwegian sovereign wealth fund a type of this currency manipulation as its main purpose is to invest the foreign currencies Norway receives in foreign assets rather than converting it to NOK?
Markets are a confidence game backed by their currencies, manipulated certainly.
Wager on the RMB today?
Trillions of US dollars of bond buying and economic relief packages by the US government to support growth and encourage inflation have already resulted in significant depreciation of the US dollar against most currencies and the slide is expected to continue.
Europe and the UK have taken similar measures but not as extensive and there seems to be rising sentiment that both have to match the US to prevent further gains against the dollar.
Doesn't this make the US the largest currency manipulator?
@@rap3208 Yes. But nobody really cares.
Because at the end of the day they'd rather be holding USD than any other currency. Prove me wrong.
@@slypear You don't see the dedollarization snowballing? Go read some papers, you won't find it in your media.
Yes, and right they are. That way they avoided the 'Dutch Disease': killing off normal sectors' competitiveness by 1 sector that drives up the currency (natural gas). Oil and gas in the case of Norway.
The case of China is different, because they have a very diverse economy (and are much bigger), therefore these tricks distort global currency values. Germany's trade balance problems are absorbed by the weaker Euro-countries, causing Dutch disease like symptoms there.
Very interesting! Always great to see new videos from you.
lol China is playing 4D chess while Western economists still on 3D
Paperdragon so far...
Nope. Not at all. People always invest extra cash this way. It's part of basic human nature and goes as far back as civilization itself. It's just, to you people "China* is the enemy" and you need newer and newer stuff to accuse them or justify some protectionist BS.
*China and a few others.
@@akeshshi9137 So much so, that you guys gotto lie to the teeth just to adopt protectionism.
As a non-economist, I find elusive to pin down the definition of currency manipulation. My reasons are as follow:
1. Fiat currency. Its value is purely because of manipulation. Gov insists you pay tax/fine/fees with that.
2. Currencies are products of central banks. (like music record copies, membership fess). It is a producer right to set any price like any other products, isn't it (even if it is a wrong value determined by God).
3. Both low and high currency values and their both pro and con . Not a one side is always better but just a trade off. How well one manages its chosen position is more of a deciding factor (Swiss currency is strong but they seem OK until CS but still)
Some say it's china's business what it does with its earnings (and be opaque about it).
However, isn't this policy really part of an industrial policy that can be likened to the "beggar thy neighbour" policies that were "popular" in the thirties? (And that did not really serve world peace.)
China is Manufacturer..so they can move this way without bankrupting any country .
Those countries will be buying Chinese brand products instead, which will still be China's gain..
@@calvinblue894 Not sure what you mean. In what way is this different from a beggar thy neighbour policy that has governments actively advance domestic over foreign production? (And what do you mean with China is a manufacturer? So are the US and the EU. They even manufactured more before China started its export oriented "industrial policy", which underscores my point I think)
@@Ed-bq4rp It's different..you just don't see the plot..
In China's positioning as a Manufacturer, West defame China companies..
Every company need customers to evolve, chinese companies need customers to be competitive.
Just think Japan if they were blocked back then.
Japan undercut the West, so does China.
But the moment Japan products became better, they sold higher prices.
West blocked China from that and threaten to pull companies out.. endangering China. If companies all pull out, China will swing back to poverty, and population cannot take rich to poor direction and will revolt.. that's West plan.
So..China play a different strategy..to save itself.
With these countries dependent on China, they will buy Chinese products and help China move forward without West endangering.
See the plot?
I think China should strengthen its military industry system and establish military bases everywhere, which is truly conducive to world peace.
this is undervalued content. thank you so much marco
Why should china tell the us or show reciepts to the US for the money it own?
To be clear, youre asking why major international trading partners should be open and honest with their finances? Or what impact not doing so has?
You actually need that logic spelled out further than it already was? Just kinda glossed over the whole video and skipped to the comments? When the answer was literally 30 seconds in?
Pretty idiotic question don't you think? Wouldn't you like to know the financial status of the other party you are doing business with?
@@shaunsensei6948 nope... do you think Chinese or the Africans know about every penny the EU has?
China "should" not. However, this policy of hiding shows bad faith on china's part. So the real question would rather be, why is china not at least honest about its industrial policy via currency manipulation.
@@shaunsensei6948 it's not idiotic, chill out.
This whole video just thickens the question: why the hell are banks all over the world private? China fail-proofed its economy with state-owned banks and increased their influence, power and economy while doing so, showing it works better than privately-owned banks. In any other country this wouldn't be possible.
Chinese banks are private but the Goverment has more power to control them.
@@MajorGarland there are private banks in china, but the ones he talked about in the video responsible for the economic maneuvers depicted are state owned. list of banks: en.wikipedia.org/wiki/List_of_banks_in_China
Chinese politicians and economists always a couple steps ahead.
Correct me if I'm wrong, but it seems like meritocracy is valued in Chinese society. Your leaders are all well-educated and experts in their respective fields.
@@evilleader1991 I was not born in China and never grew up in China. In fact, I am fourth generation overseas Chinese, so Chinese politicians are not "my leaders". I just made a remark that Chinese politicians made preparations to stave off sanctions (in case they occur).
Didn’t the FED deposit large amounts of USD in banks FED accounts which couldn’t be moved (exchanged for foreign currency) but used as collateral to help stabilize the banking system? Sounds li be ke China is doing the same thing but with USD rather than just printing their own currency … why would the Bank of England not have the same ability as all other central banks? Perhaps economists just don’t get banking in any system.
China internal consumption is also low because the government is hiding a lot of money rather than spending on citizens to generate more consumption.
Free money for free inflation like United Snakes? No way😊
Need more obese people?
Why should they?
Low in what context? Mind to share your findings?
I wonder if the whole CBDC push is really about this issue and nothing else. In any event, it makes sense for China and other countries to do this with the US dollar. If that's the reserve currency then it is, and they should manage it as they see fit for their own interests.
As I see it, China did not hoard their dollars but put them to use in the Belt and Road Initiative, which simply is an infrastructural investment. That is what is the west should do too, rather than sinking huge amounts in defense and wage constant war, which is basically the least beneficial production and the least useful consumption: Government consumption. Meanwhile, we let the infrastructure, free markets, social coherence and fabric of our societies go to waste. Maybe our economist could look at that, instead of letting themselves be used in the blame game.
Big enough to raise concerns about China’s preparations for potential “conflicts “ in the near future.
The way money works is simple, “the quicker it’s made, the quicker it’s spent!”
Can you imagine what the Chip restrictions are doing to its growth industries.
So the basic conclusions of this video are: (1) it is better to have a meritocratic system where the leaders are well qualified for their jobs and have reasonable leeway to do what they're supposed to do, than a system where two (or more) parties spend all their energy tearing down each other with megaphones all day, with billionaires spending obscene amounts of money buying politicians; and (2) it is better to have a strong central government that can act in the national interest, than an alternative model which says all forms of government are a restraint on people's maximum freedom and government must be drowned in a bath tub. Got it! I knew (1) and (2) were true all along.
Bro you sound like a smart Indian and you are spot on, I wish my country have real politicians who can act not for themselves but also the interest of the people. I don't really care if you are a thief or a god, I just need to provide for myself and family and I am your believer.
I feel like if you know about it than the US Government also knows about it....
The next video should be about how the pentagon has been hiding about its expenses and how they get away with unaudited budget !!!
ok boomer
@@thetaomega7816 Oh yeah little anchovie, Have you heard of Animal Farm ? They refer to a trick called scapegoating to distract from the real issue. China has become the scapegoat to divert from all the waste and corruption happening in Murica. Where did those billions sent to Ukraine go ? Could healthcare and homelesness be solved with those billions instead ? For sure, but scapegoating on China makes it easier to steal those billions under your nose , right ?
If a country's central bank is independent from the govt then who owns the assets of the central bank ?
The Rothschilds, Rockerfellas, Fords aka the Federal Reserve.
This is laughable because of the title. The correct title is "How a wealthy country should hides their own money from pirates of Anglo-Saxon.
Most concerning isn't that China can covertly manipulate their exchange rate, the balance of trade, or defense of their currency. They have the power to seriously damage the value of the dollar, which must retain its value to remain the world currency. The last thing the U.S. wants is dollars coming back to it. It is their number one export. It would have a huge opportunity cost for China, but it's a nuclear option.
Good, see Venezuela for what happens when u trust foreign banks with your wealth.
How do you know about it if they are hiding it?
China should create an organization similar to the European Union that encompasses the BRICS countries and promotes their economic influence and friendly business relationships. Through this organization, they can initiate business activities among themselves and within their own countries, benefiting everyone involved. By countering the hegemony of Western countries and moving away from their exploitative practices, these progressive nations can not only thrive but also advance rapidly in their own respective ways. It is crucial to expedite this process.
I would like to know what international law or what authority China's money policy is breaking the rule with? Probably none? "Hiding" isn't it in this case not illegal?
Western countries have a lot to learn from the Chinese ingenuity
11:01 thanks yuri, great material 🎉
You asked for opinions,so…
You are totally wrong to blame China. China is using their money for global cooperative infrastructure projects and one effect of these investment projects is the stabilization of their currency value.
Implying that China is working on global infrastructure just the keep their currency low, ignores China’s culture of cooperation.
China is all about win-win situations, unlike the Americans.
I find it very difficult to believe that the US at least covertly didn’t know what China has stashed. There isn’t much that isn’t tracked at least in a general way of outstanding capitol.
"Hides from America" Bro is working on his phd in clickbait
Moral of story Chinese are very smart when it comes to money
I wholeheartedly concur with What they need is just their hegemony. One of the most prominent instances of this is the lengthy history of colonialism in Western nations. By plundering and looting other countries, they have expanded their empires and grown via exploitation. The present global financial structure, which goes by the titles of the IMF (International Monetary Fund) and the World Bank, was established when colonialism was no longer seen as acceptable. These technological systems have frequently been created at the cost of developing countries in order to benefit Western nations and their financial interests. It is disappointing to see this predatory behavior continue for so many years. Sadly, not much has changed from the outdated colonial structures, and these discriminatory practices still exist. And here is nothing new to say Western countries back its Shameless title!"🙄🙄
Without colonialism Europe would still be feudal, as there would not be enough wealth for any other social structure. Africa would still be a dark continent. Perhaps you would prefer the world that way.
@@alanjenkins1508 That is guesswork imo
@@alanjenkins1508 Just as you disagree with your perspective, just as you also discover what you want! If you don't understand You must be tougher in your pride, I assume you get what I'm saying, since what's happening doesn't mean the world is going to end for you, utilize your head! Why on earth are you here, then? To visit here and make such remarks is quite strange. Well, I must say, I feel really empathetic towards your unique mental condition! 😄
Totally agree
US should stop spending more than it earns. And Chinese can do whatever they wants with their money
How can China having double of the reported reserves yet its GDP is 60% smaller than the reported figures?
China is the financial secrecy capital of the world.
Because double-accounting.
Grifters gonna grift.
You watch too many youtube videos and Indian channels
Literally the sources for the "China's GDP is 60% smaller" came from one dude.
Haha, good one! Because the 60% accusation was pulled out of a single researcher's behind.
How can this be considered a secret if the Belt and Road initiative is widely known worldwide?
We all know the biggest currency manipulator has always been the U.S.
not even close
US invests on overseas bases with equipment. If US needs money, it can sell its F-16, F-35, etc!!
I have heard most of the Chinese debt (central or local) is kind of “constructive debt” which was spent mostly on infrastructure development or asset procurements domestically and internationally (BRI) to develop positive incomes in coming years although the number spent over years is huge ,about 320 trillion Chinese yuan, i.e. 40 plus trillions US, some examples are high speed train network construction of 42 K currently , 3500 kms each year now to reach 70 k in year 2035; ports, highways, bridges, 5G or 6G network, green energy network constructions, rare and essential industrial mineral assets procurement in Africa, South America and everywhere else including lithium, copper etc. They are not spent on welfare, direct federal funds to public public or military budgets to consume, so they are “smart debt” in reality. What’s more sad about the spending tragedy of US is only if it can spend $6 trillions in Iraq and Afghanistan war in domestic infrastructure and high tech, natural resources and education instead. It certainly required long term strategy instead of the 4 year election campaign goal.
This is a farce, the US has been the largest spender on technology and science since the cold war.
Debt can be unsustainable even if it's "constructive". That's why BRI lending to most countries have declined after China spent so much. It's also why the real estate crisis occurred in China despite the industry building so many homes. There is such a thing as too much and diminishing returns.
@@100c0c Sustainability is exactly the biggest problem of US, it’s meaningless without checking the net asset balance by comparing total debt and asset, via a report of McKinsey Global Institute in 2021, China's net worth reached $120 trillion in 2020 to overtake the U.S.'s $89 trillion. Second, China Gross Savings Rate was measured at 45.9% in Dec 2021, compared with 45.9% in the previous year. Comparing US Gross Savings Rate was measured at 17.8% in Dec 2022. Third, China Total Deposits was reported at 38,665.054 USD bn (386Trillion ) in May 2023. That McKinsey report also show China had in 2020-21 surpassed the United States becoming the wealthiest nation in the world.
There is really no Chinese debt because the lender and borrower is ultimately the same entity as the debt is internal. There are no interest or principal payments and all debts can be wiped off at any time. The excess capital from exports/imports, after meeting all obligations, is allocated to internal infrastructure, critical industries or BRI. China doesn't owe any foreign governments any money.
@@100c0c Much of the decline due to stop building coal power plant that all developing countries needs in 2020. w/o power it is very hard to grow.
Just wondering why great economist like you isn't forex trader?
is there any fact that retail trader doesn't know about this industry?
Man these Chinese are so smart and clever. I have a feelings countering them won't be like Soviet Union, they are too far sighted and their every moves are like a chess.
lolol
Because their socialistic views and system make them act differently, for example, socialist country with communist goal always want to lift up the living standard of poor people by industrializing these poor countryies.
Profit-driven Capitalist country would never want to do that since it would bring them no quick profits. Since their capital are privately owned by the capitalists, they would never have the incentive to help lifting up the living standards of poor people.
China literally becomes a rich socialist country with communist goal and with a big war chest in the State's hands, not in individual capitalist. They would use that big war chest to serve their socialistic or communist goal, but not in Soviet Union Warmongering style. They certainly have more ambition and intensions than capitalist countries to help poor countries on the road of industrialization. But Chinese socialist government do in a more sustainable manner than Soviet Union did.
So what I actually means is that Chinese find a way which serve both their investment needs ( using the dollers ) and their socialistic needs ( helping poor countries achieved industrialization)
@@directxxxx71 What?
So PRChina somehow invented socialism under the pretext of Western Marxism?
Get a friggin grip, man~
Like nowhere else has better functioning socialist governance than a totalitarian COMMUNIST country than PRChina?
Just went back to the start of the vid....council on foreign relations (CFR) hahaha say no more
In the light of US sanction and Freezing of Russian reserves all middle power nations are looking for Other reserves than US dollars. Including Saudi, Brazil, South American Nations.
Why is China so rich? Simply because they are selling more than buying.. they are highly skilful in trading..😊.
Every country has its own monetry policy. Most countries make it illegal for private entities to hold foreign currencies in CFC accounts after a specific grace period as they can then potentially speculate or manipulate their local currency.
The US to fund its war behemoth has chosen the route of debt accumulation/levered funding. Thereby accumulating their debt eventually into an unsustainable level. This will come when China has a substantially larger money supply than the USA & its military might is much stronger to weather an ailing US attack who continues to fall every year by investing more into defence with diminishing returns as it holds up phony wars to feed its bloated military industrial complex. Moveover, another latent play with China is to substitute the dollar with its BRICS partners. If the BRICS nations manage to sustain growth levels over 6 or 7% in the next 50 years they will replace western Europe as the counterbalance of the world economy. Brazil has wonderful potential if corruption, even wealth distribution & CIA meddling is routed out. Russia is a question mark, the oligarghic system ensures that there can never be real sustainable growth as national income is spread amongst the top with scraps falling to bottom if possible. This diminishes a strong retail market which is the lifeline to consumption activity in an economy. India is rising quite well but still has to uplift its masses from abject poverty to empower the masses to reach developed country status regarding economic consumption ratios. It has issues with poor manufacturing quality with high tec & industrial machines. (At least one generation behind in producing hitec, high yield products.) Their motor industry or yellow goods market personifies this. Sweat shops are the prevailant growth market. This is a pseudo sustainable growth as an increase in household purchasing power will drown this type of industry. Next is the severe brain drain as wages for professionals are low due to there being an oversupply of professionals and great disparity in income & wealth holdings between industrialist elites & the growing middle class. Indian elites refuse to share. Poor national infrastructure to improve supply chain lags & ease of business. Bureaucracy & corruption plagues India. South Africa has all the hallmarks of the 3 former. Infrastructure & business framework in South Africa was excellent (1st world) but the but awful oligarch rule over the last 20 years has placed South Africa in a role more & more like Russia so it also a "question mark." to realistic future sustainability.
The USA is definitely on its way out. The question is when, how & most importantly what cost to humanity.
I like your writing ✍
The CCP has a demographic problem
Say you got a dumpling shop. Say you got 10% less customers and the customers are older. (older customers eat less)
Will business be better or worse?
The EU and Russia have demographic problems and the global south doesn't have money.
Less individuals = less domestic consumption = less money for CCP companies = bad economy = less money for the CCP government = less money for the CCP military.
@@jonathanaustinstern1 Agreed. However the same logic applies to US hegemony which is already on a slippery slope due to its foreign debt and constant deficits due to tax cuts for the rich & maximum defence spending.
Inequality in the US & many other OECD capitalist countries have been steadily rising. The super rich are not going to buy cheap dumplings but champagne & kobe beef or more likely binge on cocaine & cat to stay thin.
I am not a fan of the CCP nor the US because they are both despotic & contradictory regimes with different marketing & packaging consultants.
World War II taught us much about humanity & greed but people are fickle & vane. Capitalism rests on a proviso of infinite growth, which we know is unsustainable. I have been fooled once by Reaganomics & Milton Friedman. I have my whip lashes to prove it.
@@louvendran7273
Yes Americans don't live well. Yes Americans are not happy. That being said
The CCP and Russia fail before the US
The EU is facing demographic collapse and the end of globalization they fail as well
Anyone else going to beat the US?
South Africa has massive structural problems and is basically a failed state in most respects. And India's Jaishankar has denied any BRICS currency. BRICS has always really only been China, it's a Chinese institution pretending to be multilateral. The biggest problem for many developing countries will probably be climate change and its effects moving forward.
Reserve or central banks do not need to keep their reserves in US-denominated products. Many of these central banks keep them in other denominated currency bonds like Euro or gold. So far there is need to declare your gold holdings.
They've been buying gold too. Their reported gold reserves are reportedly far lower than they should be given the amounts they have bought.
I wonder what that's about?
I see Chinese state banks were using $ to buy Yuan yesterday (Thur 20/7) to support the Yuan.
The US has around 4 times the gold reserves of China. The EU combined has more than the US. It's not likely China would be thrilled about going to a gold reserve standard. They really haven't been accumulating much of it, anyway.
@@MrCarlGW
Going to a gold standard is not a competitive move against other gold holdings. It doesn't matter how much gold other countries have. It is merely a standard. And, curiously I never referred to that. So your denial is telling.
_"They really haven't been accumulating much of it, anyway."_
Total rubbish. Either get informed, or stop trolling.
@kevinu.k.7042 You aren't informed and make no sense. If gold us the standard there will be a value assigned to it. The more you have the more it's worth. Look at a chart of gold purchases by China, too.
@@MrCarlGW
There is an international gold market and that is the value of gold at any given time.
No, the more you have does not make gold worth more.
As for Chinese gold purchases some work was done by an American economist. He compared the amount of gold purchased on the open market over a few years to the CCP stated Gold reserves. He showed how the stated gold reserves did not reflect the purchases.
I've now muted you because you resort to aggressive posts when there is not need. Trolling.
You touch on this aspect briefly but I think we need to stress more how permanent trade surpluses are detrimental to China and profitable to the US. The end goal of the Economy is to provide consumer goods. Saving, investing and exporting must be done but only to serve the final goal of consuming.
A powerful nation takes away brains, capital and consumer goods for the rest of the world and gives worthless debt, ever expending until it pops! When the West took away Russian dollars/euros, they basically took the gas they received in previous years for free and Russia lost its gas.
@@ThomasVWorm I agree (also, their economic openness/servitude allows them to learn/spy on Western technologies) but at some point, China will need to find a financial and commercial way of turning this enormous trade surplus of consumer goods from America to their own people.
@@ThomasVWorm I agree with the general idea, although it is not even about "fair distribution", the goods they send to the US are mostly given away, like a tribute.
Don't hate the player hate the game 😂