The shift in Western discourse on China over the last five years has been dramatic. Trade wars, tech wars, COVID, Xi Jinping’s crackdowns, the real estate bubble, Omicron and now Putin’s war have all contributed. On this shift hinges our entire outlook for the global economy and world affairs more generally.
I believe the CCP leadership in China is very savvy about international relationships. They carefully analyze their opponents moves and assess their strengths and weaknesses in order to improve their own strategic planning.
The Ukraine war presents some opportunities as well as complications for China. It clearly provides them with more information about how the US and it’s allies might approach their military moves on Taiwan. They probably wouldn’t mind if the US & EU became bogged down in a quagmire with Russia over Ukraine. It presents huge problems too, of course.
China is doubtless also observing the role of US and European financial institutions used as weapons against Russia. Perhaps they are hoping to blunt that financial influence by increasing the stake of those institutions in the Chinese economy. The carrot of privatizing those huge—HUGE—Chinese retirement accounts and offering a share to the likes of BlackRock or JP Morgen Chase could be a way to help achieve that.
China’s leaders are much smarter than Putin and his tiny gang of a few. They are far less inclined than Russia to embark on an unwise, poorly timed, and irreversible military action that will bring world opinion crashing down upon them.
China generally seems to prefer to let their enemies use up resources and fatigue themselves—then “go fishing in troubled waters” to take advantage of their weakened state.
The complexity of the situation is simultaneously fascinating and hair-raising!
Adam — I'm very surprised you don't attend in this treatment to some critical, well-known issues:
(a) the long-standing capital misallocation, asset price bubbles, and other economic issues that Michael Pettis among others has long covered which seem to portend lower growth over the medium term, nor
(b) Xi Jinping's prioritization of political over economic issues especially in recent years, including the knock-on effects to economic management owning to the yes-man-ism and loyalty tests in the Party.
Whatever Liu He and Li Keqiang may say, since 2019 at the latest theirs have not been the guiding hand even in the economic sphere.
" In accommodating the wealth of an aging population and achieving a macroeconomic rebalancing, the interests of the regime and those of global finance are still aligned."
But are the interests of private U.S. asset managers aligned with the average Chinese pension-fund beneficiary? What would Benjamin Braun think?