Posted by: 2-01-2019, 09:16
China woke up and went on a big road
Where is China going? In the market or socialism? How will China's relations with the US develop? New China is new threats or new opportunities for Russia?
One got the feeling that we were discussing a snowman. The Yeti hid from us in a cave high in the Himalayas for a long time. Now he has grown, matured and out of cover. It stretches and looks around. Predicting his actions is impossible …
China, of course, is a completely different culture, a separate civilization, an alien mind. There were many interesting speeches on this score. But you cannot live together for 1000 years (to be friends, to fight, to quarrel, to put up, to do a joint business) and not to know anything about your partner, except for its mysteriousness and unpredictability.
In the face of uncertainty, it is difficult to build a sustainable strategy of our own. The question of the threats and benefits of developing relations between Russia and China, divided the conference participants into two halves. After that, I immediately changed the title of my report (in the title). I will try to justify …
2 WRITING, 7 IN MIND HAS POSTED
By 2008, China had formed a huge amount of foreign exchange reserves ($ 3.8 trillion). The world market conjuncture has become directly dependent on Chinese investment, and therefore on the goals of Beijing.
On the eve of the crisis, China Investment Corporation (CIC) was created with a primary authorized capital of $ 200 billion (US Federal Reserve reserves at that time were $ 12 billion). CIC's objectives included penetrating into the authorized capital of transnational corporations, introducing Chinese trademarks to the world market, and participating in strategic oil and gas projects.
Before the crisis, the main share of China's investments fell on the United States and Canada (59%), after — on the Virgin and Cayman Islands. Offshore hid the direction of the financial expansion of Beijing. The anti-offshore company, conducted in order to combat terrorism, has opened up all the money-paths. Subsequent US actions in Afghanistan and the Middle East showed where China achieved the greatest success (or where it posed the greatest threat to the global financial center).
The large-scale issue of the US Federal Reserve (quantitative easing) unbalanced the market. China’s investment potential, and with it its ability to influence the future of the world economy, was urgently curtailed. Beijing has been squeezed out of the global financial space.
In 2008, the world order on the basis of economic reductionism read the verdict — the financial sector was torn off from the manufacturing sector. In modern political geography, this gap has passed between the West and the East, between the transatlantic and Eurasian contour.
Today the capital market does not need a real economy, which, in turn, dispenses with the financial sector. Banks generate profits at the expense of interest rate differences, transferring money from one market to another. For example, in Russia the volume of currency speculation exceeds GDP, according to Sergey Glazyev, 10 times.
For banks, the real sector of the economy is too low profitable against the background of speculative profits. The industry groans, incurs losses, but continues to finance itself by its own (only known to it) laws.
Investing in the real sector is, in fact, the loss of the financial market.
Was a discriminatory model of the financial market the purpose of the monetary policy of the United States or the effect arose by chance (as a side) it does not matter In fact, we have what is. The resource and industrial sector (East) is deprived of direct access to credit (the West), the right to which they must prove their loyalty.
On the one hand, the market is in dire need of rebalancing the manufacturing and financial sector. And on the other — who will pay for it?
If the manufacturing sector accepts financial conditions, then the price of goods and raw materials will automatically include all the debts of the West (not only real, but also future). Need such rebalancing of resource and producing countries? What will she get up to? Maybe it's cheaper to create your own transaction system?
Here the main question for producing and resource countries. The answer seems to be received.In any case, we see how the BRICS countries, in the framework of mutual agreements, create copies of financial institutions of the Anglo-Saxon model. We should not even speak about BRICS, but about the new «big three” Russia-India-China („Eurasian G3”, RIC).
A purely mathematical model built on the basis of free exchange rates shows that simply adding financial potentials will lower the loan rate in the RIC countries (the abbreviation is legitimized at the last G20 summit) below 2%.
The problem of the West is that, having a developed world transaction system, it does not control the source of the origin of world money (savings are generated by producing and resource countries). The world's chief debtor by force actually usurped the role of a global investor.
It is necessary to understand that financial and credit relations are directly related to the coercive apparatus and the mechanism for legitimizing the use of force. Simply put, without a sustainable security space (a single set of rules, which will be agreed — or will be forced to agree — all participants in the global value chain), restarting the global economy will not work.
What is important here? It is important to rigidly fix: the approach of the production and financial sector to the „common security space” is the exact opposite. Some see global governance as inclusive (the Peace of Westphalia and Yalta agreements), where commitments are guaranteed by a wide range of interstate agreements. Others seek to remove the constitutional role of the state (the new „Washington consensus”) from the world economy.
The position of supporters of the „Washington“ is crafty. From the sphere of economic regulation it is proposed to remove all states except one — the most democratic and fair. In the corporate world of equal business opportunities, someone will still need to maintain order (legitimate contour) while maintaining the hierarchy.
After 2008, the Anglo-Saxon model of debt growth of the economy has lost the confidence of key players. China and Russia realized it as the US installation on geopolitical domination. The paradox is that the crisis of confidence in world actors was caused not by a slowdown in the growth of the world economy, but by the expansion of its prospects.
Between the new (China, Russia, India) and the old (US, EU) participants in the race for leadership there is no common understanding of the goals and principles of the growth effects section (disagreement). However, at the same time, they are closely related to current financial operations (sitting in the general model of development).
It is impossible to fit opposing growth strategies into a single economic matrix. For political divorce, which in fact has already occurred, inevitably there should be a division of property (capital assets) and long-term risk management systems (credit-monetary model).
The model of the international division of labor, formed on the wave of financial globalization, provides for a single emission (or legal / legitimizing) center. It is not able to capitalize on other global players. It is also necessary to „hack on the nose“ — the section is inevitable.
1000 AND 1 CHINESE SECRET
It should be understood that this is not about a new way of managing the flow of value, but about new socio-economic formats and military-political alliances. The discussion on the growth model of the world economy has gone beyond economic knowledge into an interdisciplinary space. Cultural studies, sociology and political economy are replacing narrow economism.
The subject of the research is not the calculation of goods and services produced, but the management of the entire contour of national wealth, which primarily includes social (human) capital. Thomas Piketti undermined the foundations of liberal dogma. Capital in the 21st Century has sparked heated debates in all the intellectual centers of the world (except Russia), literally forced to begin reassessing market principles.
The world market is no longer viewed by national systems as a way to make a profit (commodity competition). The criterion of efficiency is the ability of society to scale itself (historical competition).Conceptually, the global market today is a platform for the realization of national interests (a framework space limiting unwarranted ambitions).
The crucial point in the approaches was the report of the Secretariat of the UN Conference on Trade and Development (UNCTAD) «On Trade and Development, 2014“. I will begin with a quote that unexpectedly accurately characterizes the development model for Deng Xiaoping (cheap labor in exchange for a technological breakthrough):
«Given the real and financial returns, it should be clear that a sustainable and stable growth model based on demand must first be developed at the national level instead of trying to achieve competitive reductions in expenditures and imports in every single country to ensure a revitalization process. net export account. „
What is it about? Here that building a national growth model for export revenues by reducing domestic (primarily, government) spending is a road to nowhere. It is the „expenditure” model that is basic for the Russian economy. Even simpler, it’s about the tsarina of the financial system of the Russian Federation — about the „fiscal rule”.
The main idea of the report: the growth of well-being of developed countries was determined not by market forces, but by national policies pursuing the interests of, above all, their people. According to the authors, nobody can repeat this path today. Developed countries have created such a mechanism for regulating the world market that blocks the ability of developing countries to pursue policies in their own interests.
The Bretton Woods system protects the investor and works only for his interests. A striking example, China provides about 1/3 of world electronics trade, and the profit of Chinese companies in this industry is only 3%.
The conclusion of the report literally requires giving the authors a liberal anathema. The conclusion is: «It is necessary to abandon investment contracts and return to national legislation. The national development strategy should be based on domestic sources and methods of investment, foreign investments should complement, but not replace domestic ones.“
In 1992, the United Nations Conference on Ecology reached a similar conclusion about the impossibility of replicating the Western model of development by other countries and the priority of national approaches. And the anniversary report of the Club of Rome, which was released at the end of last year, shaped this idea into an ideological concept.
The priority of the fundamental foundations (social values) over economic reductionism began to take on the appearance of a new political philosophy. Its essence is to increase the common good, and not to maximize the private benefit. The recent APEC and G20 summits should be seen in this context. The absence of a general declaration is evidence of heated debate. The range of countries that consider themselves responsible for world order has expanded.
The new political agenda is being tested in a wide range. The UNCAD report cites the encyclicals of Pope Francis, where the main idea is to abandon the «sacralization of the existing system.“ It is about the elimination of the US international monopoly, in particular, and the liberal doctrine of the development of the world, in general.
The threat of losing leadership in the institutions of global governance has forced the United States to consciously destroy them. Washington’s unilateral actions on the basis of a coalition of a conditional majority under the auspices of NATO have replaced the conciliation procedures of the UN Security Council.
The world has entered an era of strong political volatility (the uncertainty of the parameters and principles of the legitimization of economic ties outside the zones of national control). Today it is the main problem.
The era of Deng Xiaoping is over. The development of China in the form of «industrial offshore“ of the western economy has reached its limit. The model is morally obsolete. You should forget about past achievements and achievements (the sooner the better). China can no longer «play number two“, acting Confucian in the shadow of other conflicts.
The trade war declared by Trump deprived Beijing of the possibility of hiding behind the «hot” confrontation between the United States and Russia, moving its interests in both directions, as it has been doing lately. Circumstances force (oblige) China to take on some of the responsibility in the big game.
Beijing feels, understands and responds to the challenge. The political „burial“ of the Deng Xiaoping era took place last year at the 19th Congress of the CPC Central Committee (the abolition of two terms in office and the „canonization“ of Xi Jinping's theoretical heritage after the legacy of Mao and Deng). The economic reversal occurred even earlier — with the advent of a program to transfer the economy to an internal investment mechanism.
After the crisis of 2008, the share of foreign participation in industrial production in China began to decline rapidly (peak, 2003 — 35.9%), while the share of joint ventures with 100% foreign participation increased (about 90% of the joint venture). The figures look paradoxical: the percentage of purely foreign joint ventures is growing, and the share of foreigners in production is falling. Paradox imaginary.
China „leaves“ the joint venture and creates 100 percent „Chinese“ enterprises based on the same technologies. Chinese enterprises, through cost (quality is preserved), squeeze the joint venture out of the market. The foreign share in China’s trade surplus is falling, and the national share is growing. I think it would not be an exaggeration to say that it was this process that caused Trump to declare war on Beijing.
China is not just moving to domestic growth growth mechanisms. China wants to make its domestic market a source of growth for the entire region (the center of a new growth model), which requires the reconstruction of a full business cycle in the region (resources, production, consumption).
The objectives of forming the Chinese-centric growth model are the Asia-for-Asia, One Belt and One Way strategies and the course towards the internationalization of the yuan.Will Beijing be able to become a new (second, another …) monetary center, creating a mechanism for strategic (long-term) risk management?
I am sure that alone can not. It's not about limited resources or lack of will. The fact is that the investment pyramid is crowned not by the economic or trade regime, but by the agreement of all participants in the exchange of values? with the general rules. With the existing contradictions in the region, it will not be easy to achieve agreement.
Neighbors in the Asia-Pacific region are scared by the power of China, and for Europe it, as noted at the conference, is a fundamentally different (alien) civilization. China needs a counterweight in Asia, and a guide (sherpa) on Europe. Otherwise, the project «One Belt — One Way“ turns into an absurdity. Greater Eurasia will once again confirm the status of an unrealizable project (Genghis Khan beat-beat, Stalin and Mao beat-beat, Xi and Putin beat-beat …).
Beijing to Moscow is pushing not the raw materials, but the Eurasian factor (and, it seems, is understood in the political leadership of Russia). Creating a new growth model for China is in the nature of an eschatological challenge (it will either create or head in the bushes). If there is no such understanding in the Kremlin, and negotiations with Beijing are proceeding solely on the basis of his interest in hydrocarbons, then we are waiting for a change of soap for an awl. The raw material appendage of the West is perhaps even better than the rudimentary process of China.
It must be admitted that in the emerging Russia-China-India alliance there is a historic chance to preserve the internal alternative of the world agenda (growth metaphysics). A chance not only for RIC participants, but also for all other countries, including Europe and, oddly enough, the USA. There are risks and dangers along the way.
The main risk is the hegemonism of China, the cloning of the «American supermarket» in the Eurasian variant (the «Beijing Consensus»). For the sake of justice, it should be said that the «Beijing Consensus» is possible only if other RIC countries show a lack of will, as happened in the case of post-war Europe. Which is unlikely.
In the end, a kind word about «reposed» is supposed.
The main lesson for us of the passing era of Deng Xiaoping (the secret of the Chinese miracle) is that the country's political and economic growth is directly related to the growth of national consciousness. An attempt to reduce the state to the role of «night watchman» (our case) turns the country into a territory for development by a stronger subject of history.
Internally mobilized society absorbs weakly project spaces. However, sooner or later, «burping» comes. As practice shows, nation-states sometimes return, which always leads to the collapse of an empire. This is the historical lesson that new (future) China should remember.
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