Hong Kong: end of one country, two systems?

[Trick]

Except the part that is missing here is that the Hong Kong dollar is convertible and the RMB is not (and will most likely never be). While HK has shrunk form being 20% of the Chinese economy to 3% over the last 30 years, it is still the only gateway for moving RMB into hard currency.

And the US just pulled HK's financial status. Once the HK dollar is no longer convertible, this is going to hit the Chinese economy very hard. Now that isn't on the table yet, but given how many people the PRC just murdered off in the West with CV-19 it is coming.

https://www.aljazeera.com/news/2020/05/ ... 46550.html

Also ignore what doomsayers are spouting about the US economy and the West writ large. It's utter bullshit.

The fact is that without significant political, and cultural reform, mainland China will remain, and most likely always be, a free rider on Western technological and financial development. My personal suspicion is that the level of development you currently see in the PRC is essentially the limit of what can currently be done given their cultural operating system.

Hong Kong provided a critical bridge to the PRC with the West in this regard, but Xi being a socialist would rather have power, and control, over even the tiniest of his populations than development that could possibly change the power dynamic in his country.

One of the reasons why the PRC is going all in on AI is that as the society is currently structured they cannot operate next generation technology. The people running the country are hoping the machines can do this for them. And they are wrong on this.

Once the West stops using mainland China for its low and mid-level manufacturing needs, and the situation in HK and CV-19 is greatly accelerating this, they will no longer have access to hard currency. It will be devastating for the PRC.

Are you are right about much ?

Initially when the Covid-19 came around, you self assured pointed out how it would rage as a wildfire throughout Southeast Asia(because you got pneumonia while on a hippie retreat there) ....you where wrong.

Now your business having a hard time, then you are projecting your “law of attraction rays” toward China...”if my American Chinese herbal business going down you’re going down too”.......China is trembling

Spiritual elevated...right !

[bailewen]

There is no anti-science movement in the US. I don't know where you got that.
Where do you think Chinese college students go to learn science? They come to US Universities and Colleges.

Been saying it for 20 years. The past couple years the results are pouring in.

Where did I get that?

Defunding NASA.
Defunding education.
Climate deniers
The entire government reaction to the COVID thing.
The consistently increasing belief, evidenced on most threads on this forums that since we have the internet we know better than people with Phds in stuff.

They come to the US Universities and Colleges, learn out stuff, take it home, improve on it.

Massive investment into high tech in China vs massive investment into financial markets in the US.

China now has far more Phd's than we do. They have the worlds fastest 3 super computers I think, and they are rapidly outpacing us in AI.

.Q. saidL:

"US is taking away microchips from China and selling soybeans".

That's my point. The US is pressuring China to buy more soybeans while China is negotiating for better chips. Also, Chian can make chips. They make US chips. The only issue is scaling up because this is happening suddenly and faster than they wanted. But China makes their own chips, chips that can outperform most US chips now. The issue is that they don't have the scale ... yet.

People complain that Huawei is kicking the US's as at 5G just because they get all this government backing. So why isn't the US backing high tech? Instead we subsidize oil and financial markets. China is subsidizing their tech sector.

The US on it's current trajectory is doomed.

I hope we wake up, but I am not that optimistic.

[everything]

that gets into "industrial policy" and should we have industrial policy and a far ranging view vs. short-term and status quo interests... and well, "corporations are people" and lobbyists and who has power ... short-term view wins unfortunately.

[Peacedog]

Where to start.

Well, initial research indicated Cov-19 was hitting the general population (hence all of the shutdowns versus protecting specific populations). It doesn't, it kills old people. In regions where you have a lot of old people, it is pretty bad. Latin America is a good example. In Ecuador they had bodies lying in the street for three days at one point.

Second, SE Asia is run entirely by either dictatorships or socialist governments. Once you get down to the islands things get a little better. Do you really trust the reporting on this?

The PI is in a hard lockdown right now. Singapore is having some pretty serious problems due to the disease apparently being brought in by its migrant workers.

As for me, well the test results I got back yesterday evening indicate I have the antibodies associated with the disease. So, I was exposed somewhere. Hmmm, I suddenly contracted a severe case of bronchitis in a region I'd visited multiple times and spent long periods of time in without ever having the problem. And all of the signs and symptoms matched a Cov-19 infection. Granted no way of telling for sure at this point as the test was a few months removed from the active infection. But as a clinician I'd say a patient who had this had the Wuhan Flu.

As for my two businesses, well, as of three weeks ago I was in the manufacturing and distribution business. Three of the materials we used were imported from China due to issues over price point vice availability in north America. I wouldn't say I was in the herbal business.

But I'm not in any business right now. We are bankrupt. Actually, $500,000 USD in the hole and that is on top of the $500,000 USD the three partners in the two enterprises spent to set it up. My entire life savings gathered from humping a rifle for 20+ years is gone as well as the last five years of my life. Everything. So, I'm glad I gave you some enjoyment from that at least.

As for my medical practice, well, it is destroyed too. Since I am apparently susceptible to whatever the hell is in this virus the 4+ years I spent in school are completely wasted. Too dangerous to practice the hands on part of this.

As for herbalism, I do know a few of the owners of major pharmacies in the US. Speaking with them, getting their hands on anything right now is quite difficult and increasingly expensive. Probably due to the situation in mainland China being far worse than what is being reported. If/when, the US and China get into it, we won't have access to any of that. I suspect a very hard trade war. But if I lived in Taiwan, I'd be nervous right about now.

As for the PRC, this is a country that cannot feed itself, is hyper corrupt, leads the world in the number of its own citizens it killed in the 20th century, provides no high end manufacturing or significant contributions to medical or technical research on a year to year basis (everything is gathered from somewhere else), its PhDs are largely worthless in my personal experience and has no effective rule of law.

It is now actively destroying its one working integrative access point to the West, hard capital and international investment. How well do you think that is going to go?

[windwalker]

The new Hong Kong national security legislation entitles the central government’s national security organs to establish agencies in the SAR [special administrative region, Hong Kong’s official designation] to safeguard national security, while the chief executive of the Hong Kong SAR government will report to the central government at regular intervals.

The reports will include performance of duties in maintaining national security, conducting national security promotion education, and prohibiting acts that endanger national security according to law, details of the draft show.

https://www.breitbart.com/asia/2020/05/ ... hong-kong/

Not quite the end result, yet.

[Bao]

But I'm not in any business right now. We are bankrupt. Actually, $500,000 USD in the hole and that is on top of the $500,000 USD the three partners in the two enterprises spent to set it up. My entire life savings gathered from humping a rifle for 20+ years is gone as well as the last five years of my life. Everything.

I feel terribly sorry for you. Hope that you'll continue and fight. After doing business for 20 years, you have great experience and I am sure you can start something new. Lost about $150,000 in business going wrong about 5 years ago. Nothing compared to you though. It felt tough back then, but it didn't take too long to get my business running again. Just keep on fighting.

I suspect a very hard trade war.

Of course. We haven't seen the start yet. The US have forced China to defend itself. What else can they do?

As for the PRC, this is a country that cannot feed itself, is hyper corrupt, leads the world in the number of its own citizens it killed in the 20th century,

Could describe the USA exactly the same, word for word. The US create conflicts all over the world to take what they want. They feed themselves of others. It's hyper corrupt and stands for murder, mass shooting, chaos. Not the least bit more civilised than China.

provides no high end manufacturing or significant contributions to medical or technical research on a year to year basis (everything is gathered from somewhere else),

Don't completely agree.

its PhDs are largely worthless in my personal experience and has no effective rule of law.

PhDs? A whole lot of researchers, scientists etc has got there diplomas from the USA and Europe amongst other places. Law? Yeah, they know that, so it's being changed and improved.

It is now actively destroying its one working integrative access point to the West, hard capital and international investment. How well do you think that is going to go?

Again, they are forced to do what they are forced to do. They didn't start anything else than saying no to be treated as servant to the USA. I think they are stronger than the US suspects. They have good friends in many places all over the world.

[Peacedog]

Bao,

Regarding business thanks. It is appreciated. The irony was that my fall back plan in case business didn't work out was to expand my TCM practice. Now that is out the window as well.

As for everything else....

Regarding the PhD issue...the Soviets to their credit could effectively educate their own engineers and scientists. I've met a number of those guys and they are impressive. The PRC for some reason cannot. The foreign trained PhDs in the PRC are typically sharp. The locally educated ones not so much. Or not at all as regards the communications technology/IT people I met.

Even high end manufacturing eludes the PRC. The cannot make reliable engines for their fighter aircraft. They tried copying Russian designs and failed. Repeatedly. Likewise, there is a reason why Air China operates Airbus and Boeing equipment. True, they are planning to add some Comac planes to their fleet in the next few years, but in reality it represents something everyone else has been doing for 60 years.

Keep in mind the US is the agricultural superpower in the world. The US literally feeds large portions of the rest of the world via its exports and all the modern strains of grains are either produced in the US or are a direct result of US research. The fact that the rest of the world still can't outdo the work of Norman Borlaug is telling. He was a fascinating individual and quite literally single handedly saved the world from mass starvation in the 1960s, 70s and 80s.

Ultimately, if you want modern technology you need property rights and working courts. Neither of which can happen in China under the current government and quite possible not at all for any number of reasons. Both property rights and courts guarantee the ability invest in something and get a return on it. All of the developed successful countries in the world have this. It is one of the primary dividers between those countries and everyone else. For examples of developing countries that pulled it off look at Botswana and Chile (although Chile is definitely a first world country now).

Hong Kong provided this for the PRC. And now that is going away.

"Belt and road" was largely about roping in a bunch of really poor countries to the PRCs financial system. This would have given the RMB a kind of freely tradeable effect within those economies that would have made making the yuan convertible unnecessary. The initiative failed as even the countries involved thought getting tied into Beijing's orbit is insane.

The PRC ultimately is a free rider on the West. It literally cannot exist without it. It needs the West to feed itself, bankroll its government and provide the advanced technology that makes the modern world operate.

The situation in Hong Kong is, as usual with the PRC, an own goal. All the boys in Beijing had to do was leave it alone. But being socialists they couldn't do that. The HKers themselves had a good hundred years, or so, of self rule or rule under the Brits that was very soft handed. They felt they were free, or at least not subject to the horrible abuses of the Politburo, and will not willingly go back under that noose.

Based off of what is going on with cryptocurrency right now I suspect most of the money in HK is making a break for it. Give it six months, or so, and we'll know for sure.

As for the PRC itself, I find it to be a less successful version of the Soviet Union. Even though the Soviets were ultimately dependent upon the West to bankroll their government via sales of petroleum, they at least had a hard asset that others needed. The PRC lacks even this. The made a good run of doing low/mid level manufacturing for the West for about 30 years. Now that it is going away, I can't see what they are going to do to replace it.

What they are doing in HK looks like a very desperate attempt to move the money making arm of their society into a place more firmly under central government control. Yet, this doesn't work for reasons of transparency and accountability. Not smart.

Wait two years and we'll know for sure what this looks like. Granted, I only did political, economic and military reporting for about a decade for both the US government and the UN. I could be wrong.

[Bao]

Wait two years and we'll know for sure what this looks like. Granted, I only did political, economic and military reporting for about a decade for both the US government and the UN. I could be wrong.

Ok, I trust what you say. A good analysis, would be happy to read more of your thoughts. As I have followed China very intensely the last years, I know that law have changed very much and the court system is being improved. It's very different now than for just ten years ago. When it comes to invention, China often solve what is necessary. Remember that in a time when China was completely isolated, they developed nuclear weapons all by themselves. They were forced as the US made constant threats to bomb Beijing and Shanghai. So in fact, when they need to do things, they are capable of quite a lot.

[everything]

the technology doesn't require any of those other political constructs if you have self-interest of capitalism + industrial policy that emphasizes those developments. Industrial policy was talked about a lot when people thought Japan would take over and went ahead in consumer electronics and cars. What's happened is other economies (most notably S Korea) have become competitive in those industries. OTOH, China and the USA are far far ahead in AI, which Google and others believe is the most important tech for this century.

[Bill]

There is no anti-science movement in the US. I don't know where you got that.
Where do you think Chinese college students go to learn science? They come to US Universities and Colleges.

Been saying it for 20 years. The past couple years the results are pouring in.

Where did I get that?

Defunding NASA.
Defunding education.
Climate deniers
The entire government reaction to the COVID thing.
The consistently increasing belief, evidenced on most threads on this forums that since we have the internet we know better than people with Phds in stuff.

They come to the US Universities and Colleges, learn out stuff, take it home, improve on it.

Massive investment into high tech in China vs massive investment into financial markets in the US.

China now has far more Phd's than we do. They have the worlds fastest 3 super computers I think, and they are rapidly outpacing us in AI.

.Q. saidL:

"US is taking away microchips from China and selling soybeans".

That's my point. The US is pressuring China to buy more soybeans while China is negotiating for better chips. Also, Chian can make chips. They make US chips. The only issue is scaling up because this is happening suddenly and faster than they wanted. But China makes their own chips, chips that can outperform most US chips now. The issue is that they don't have the scale ... yet.

People complain that Huawei is kicking the US's as at 5G just because they get all this government backing. So why isn't the US backing high tech? Instead we subsidize oil and financial markets. China is subsidizing their tech sector.

The US on it's current trajectory is doomed.

I hope we wake up, but I am not that optimistic.

Thanks a lot for responding.
It's always helpful to hear the other side.

[windwalker]

https://www.youtube.com/watch?v=4VGl92-Iw60

[.Q.]

As for my medical practice, well, it is destroyed too. Since I am apparently susceptible to whatever the hell is in this virus the 4+ years I spent in school are completely wasted. Too dangerous to practice the hands on part of this.

Could you elaborate a bit on this? How does getting sick make what you studied in school wasted? What school is this? Traditional Chinese medicine?

[Trick]

I suspect a very hard trade war.

Of course. We haven't seen the start yet. The US have forced China to defend itself. What else can they do?

.

Treaty of Nanjing , treaty of Tianjin, treaty of Hong Kong, unequal treaties. these are the rule of trade US knows of.....equality in trade ? oh no, we can’t have that, that’s a declaration of war,,,,more Opium to the people

[Trick]

Wait two years and we'll know for sure what this looks like. Granted, I only did political, economic and military reporting for about a decade for both the US government and the UN. I could be wrong.

I know that law have changed very much and the court system is being improved. It's very different now than for just ten years ago. .

Last year I “indirectly” was in court, we came to an settlement, it worked juste for all parts.
One of my cousins in law(can one say that?) has come to be a big shot lawyer here in China(Beijing) have won quite a few cases representing private citizens against Chinese corporations.

[Bao]

Wait two years and we'll know for sure what this looks like. Granted, I only did political, economic and military reporting for about a decade for both the US government and the UN. I could be wrong.

I know that law have changed very much and the court system is being improved. It's very different now than for just ten years ago. .

Last year I “indirectly” was in court, we came to an settlement, it worked juste for all parts.
One of my cousins in law(can one say that?) has come to be a big shot lawyer here in China(Beijing) have won quite a few cases representing private citizens against Chinese corporations.

Good to hear.

They are going through lots and lots of old cases. Many who have gone free have now been put in jail. Many who took or gave bribes in those cases have also been punished with fines or jail.

What Xi Jingping wants to do is to make sure that Law is treated as Law, that it's treated strict and works the same for everybody. No personal interpretation or other things should interfere. I do believe that common people are in fact feeling that China is turning into a more just and equal society.