Curiously, one difference with planned economies like China is they can build ahead of demand. Here in the USA there has to be a demand for housing before it gets built. I.e. folks have to be crowded and homeless. So those 'empty cities' build for 10M people were not as senseless as they seem. 10M people in China is less than 1% after all.
That's an interesting point. I just checked, and China is about 56% urbanized, whereas the United States sits above 80%. If we assume that China will reach the same levels, that leaves another 250 million people yet to move to urban areas. Even with the aging population, then, it may be able to use those spaces.
Otherwise, it may be able to take advantage of anti-immigrant sentiment in the developed world. That's what intrigued me about your point. China has started to invest in African infrastructure, so why not leverage that to supplement its population when the aging curse kicks in?
>China has started to invest in African infrastructure, so why not leverage that to supplement its population when the aging curse kicks in?
Perhaps because the entity is not "China", a state, but China, a culture and a specific population with a shared history etc? So arbitrarily supplementing the population as a means to keep it going doesn't make sense?
It seems that you're assuming that there is some Real Chinese Culture that has never evolved or integrated another population or culture. Maybe I've heard wrong, and there are in fact no substantial differences between Beijing, Shanghai, and Hong Kong (let alone Xinjiang[1]). That seems incorrect, though.
Edit: Anyway, it's besides the point: we were clearly talking about China the state (the same one that built those empty cities).
>It seems that you're assuming that there is some Real Chinese Culture that has never evolved or integrated another population or culture.
I'm only recognizing that there is a Chinese culture that has been shaped by various forces (including population migration, trade, and even war and invasion) over long historical periods (keyword: long).
Which doesn't translate to some "Since we had e.g. the Mongols in the 13th century, and they are now part of Chinese culture, it's no biggie to just get some hundreds of millions of people that don't share our culture to replace our aging population" -- any more than "Since we were subjects to the Queen before 1776 it's no biggie to subject ourselves to being a UK colony again".
>Maybe I've heard wrong, and there are in fact no substantial differences between Beijing, Shanghai, and Hong Kong
That only matters if they are also more substantial than those between "Beijing, Shanghai, and Hong Kong" to Berlin, Phoenix, Santiago, Accra or London.
Otherwise, all, or almost all, countries have regional differences within the country's culture. Beijing and Shanghai are not more different than, say, New York and Savannah or New Orleans and the Quad Cities. As for Hong Kong that has been, for over a century, shaped from being a UK colony.
I definitely dispute the idea that homelessness is what drives construction in the United States. And I'd argue that in some cases building goes on "ahead of demand" in the USA as well, though it admittedly takes a lot of capital to do so, and of course it doesn't occur to the extent that China's planned economy allows for. (It also faces the same pitfalls; see Atlantic City, NJ for example.)
I'd also submit that constructing buildings which never get occupied (or don't get occupied until they begin falling into a state of disrepair) is totally senseless regardless of scale.
If they are even a few months ahead of demand, then they have a name: failed startups. In a free market, you have to have a demand the second you have a supply, else bankrupt.
You can't really talk about China being a planned economy at this point. I mean, planning goes on but it's like economic planning in Japan - something the government does through incentives and persuasion rather than commands and production quotas.
You can read the Wikipedia page on these for the actual reasons they happen[1]. It's all about Chinese local governments selling property to speculators to raise revenue and the speculators having to build to hold them rather than just sitting on the lots like regular capitalist speculators can. This does represent an inefficient use of resources but not a huge one, past ghost towns have all been filled eventually. Rapid growth covers a multitude of sins. Goodness knows what'll happen when the growth slows, as it must, but there's no particular reason to think that'll happen soon.
This is yet another way that China looks like early 19th century US. Not only are they copying industrial designs a la Samuel Slater and industrializing rapidly, they're financing local government via land speculation the way we did in the US back then. Hopefully when they have their equivalent of the panic of 1839 they'll make similar reforms.
Cities in the US are not crowded by any metric. Homelessness is typically not because of lack of housing either (I know that sounds weird to say) but more so disease, mental health problems, lack of employment opportunities or in some cases employment desire.
At first glance your comment sounds great, yeah China is just anticipating demand, but it seems much more likely it was a wonton spending spree to help the economy continue on. With that spending spree coming to a halt, now China has millions of steelworkers, miners, construction works, etc... out of work.
Nobody is going to want to live in those cities because they want to live in established cities. Ask yourself, if the goal was to anticipate demand, why wouldn't you do all of this construction alongside established cities? Why would you often times do it in the middle of nowhere?
Most are filled (already). An estimated 250M will be moving to cities in the next decade. The few much-publicized empty cities are due to bad planning of course. But that doesn't mean they didn't have great success with others.
And the new plan going forward is to 'urbanize' already-existing places, which means building an urban center around an existing town. So it can expand outward, starting with a core of city services and administration.
Those empty cities weren't the result of state planning, they are simply the savings accounts of people who don't trust banks.
You can see the same thing happening in central London, Vancouver and New York on a smaller scale. Plenty of housing in upscale neighborhoods bought as an investment and left empty.
Which cities are currently empty? China has 160 cities with over a million people. The US has 10. They seem to be doing a good at getting people there.
Does anyone else find it fascinating that over time larger numbers mean less and less? Growing up it was unheard of to hear a project of that size. 1/2 of a trillion dollars is a lot of money, now we are discussing projects of that cost.
Iraq war cost around 1 to 2 trillion dollars ? Proping up the the failed banks in 2008 cost as much.
If you can just print the money(or add zeros in computer systems ) it's not that expensive.
It doesn't matter that it turned a profit. That wasn't the point; and in some ways that makes it worse! PNC bought National City for $5 billion. National City (an Ohio only bank) was not allowed to apply for TARP. Then PNC got a $5 billion tax credit. They bought a bank for free.
All the consolidation meant that banks gained a lot of money, and the US government bought debt $1 for $1. Instead of TARP, the US government could have done something for...the people you know? The attorney general could have pushed prosecuting all the people who committed fraud (forging income documents for home loans was rampant, lying to people about home loans, etc.) from the top to the bottom. Banks should have been forced to sell loans back to consumers for quarters on the dollar (you know, what the homes were actually worth now).
We saved some retirement accounts, and everyone above 50 at the time was very thankful for that, but young people lost their homes, tons of money and the banks didn't take a hit at all. They just got stronger and swallowed other banks.
When the statement was that TARP cost $1 trillion, the fact that it actually made a profit very much IS the point. Your entire rant is what's not the point in this discussion.
I don't think it can truly be said that TARP turned profit. Because TARP was actually structured as the purchase/hedging of banks' securities. And it is impossible to know profitability of securities without knowing their Sharpe ratio, which no one knew at the time because all their valuation models were garbage as all the defaults happening in real-time soon made apparent.
I don't think it can truly be said that TARP turned profit[...]
And it is impossible to know profitability of securities without
knowing their Sharpe ratio,
I think you're mis-interpreting the Sharpe Ratio and saying something different. Profit -- ex-ante or post-ante (edit: ex-post, brain fart!) -- is always a profit.[0] Whereas, you're arguing that the profit (on a risk-adjusted basis) wasn't that good.
TARP turned a profit; it was still a bad use of the money. The US government shouldn't be responsible for propping-up bad business, and if the problem is identified as "this bank is too big to fail", the solution certainly shouldn't be making the bank bigger with low-cost loans.
Sorry to go meta and off-topic, but I'm curious about this sort of sentence because I seem to be seeing it more and more. It seems like you're making a statement, but then it is finished with a question mark. Are you asking whether the statement is true? I don't think so. My interpretation, which I think is based on similar things in colloquial speech, is that you're implying a question like, "you know that the Iraq war cost around 1 to 2 trillion dollars, right?". Is that how this is meant? Is there a name for this sort of statement-question?
I recall when an economist said, as the war was ramping up, that the cost will be in the trillions. The wise guys in the Bush administration and the military said he was yapping out of the back of his neck. They put the final cost at a few hundred billion.
Turns out the guy was right.
His math included the cost of taking care the vets. That part of the cost will keep going up until all the vets are all dead.
> The wise guys in the Bush administration and the military said he was yapping out of the back of his neck. They put the final cost at a few hundred billion.
That was the initial estimate, when the war just started.
I recall members of the Bush admin telling requesting Congress to fund the war to the tune of $50 billion, that the cost to America wasn't going to be more than that and that because Iraq has oil, the rest of the cost will come from Iraqi oil revenue.
Not too long after that, if I recall correctly, they came back for another $75 billion (?) or so. And that was not the last time.
Cost of Iraq war boggles my mind. (and makes me barf)
You hear that number trillion dollars so often that you become numb to it, but the annual tax revenue for u.s. was somewhere around 2.8 trillion.
Just imagine that. 90 million working Americans, from poor to filthy rich, working entire year, some paying quarter or third of their earnings, some companies paying billions in tax. And still amount amount to less than $3 trillion.
Bush said we'd be done in 2 weeks! Remember that? lmao One way to avoid this: stop paying taxes. (if you can earn online, then you can live outside the US & you will get a 100,000 USD deduction. Still must pay SS & Medi, but I don't think those go towards wars.)
If you adjust for inflation the numbers might not be so shocking. I googled a calculator and it claimed 1T dollars now was 250 bil back in 1976. China's population also increased over 50%, so that's another pretty big multiplier.
It's quite fascinating how fast growth in the world is in general. It reminds me of a talk about the speed of the "seemingly small" 7% per year growth.
Wouldn't this put Germany at the mercy of Russia?
edit: Downvoted for asking a question. It seems people forgot that Russia is always threatening with cutting the gas supply.
Any reputable media with 'Russia is always threatening with cutting the gas supply'? Especially Germany which has direct Nord Stream and upcoming Nord Stream2 ? It's other way around, Germany harass other countries,like Bulgaria and prevent them to build South Stream. Looks like you are victim of anti-Russia propaganda. Russia WANTS to expand it gas export.
That's exactly why I'm referring, and is not even the only point. We could even talk about invading other countries. It seems obvious that it could be another card to hold in any future negotiations. I just noticed it in the map that they will control it and got curious. I don't know how is it propaganda.
It's not just with Germany, I believe it will connect through Central Asia to Spain. Central and South Asia are the key. They're using this to project influence across these countries to eventually form alliances and sway them from the US. When China is your largest trading partner and foreign investor, the US is much more easily ignored. That's long term. For now, smart countries will be playing off both of them and their rivalry to their advantage.
Freight rail traffic from china to Europe is hugely subsidized though (can't compete with boat on cost), while the trains are coming back to china relatively empty. It is purely an influence move ATM, and doesn't have economic value yet.
Surely it can't compete on costs but on speed. It's a compromise between air and sea that has found its use. In terms of economic value: At least Deutsche Bahn claims that that route is one of their few profit pools [0]
Yes, it competes on speed. There were articles in the Chinese press trying to play this up, but there haven't been many takers as of then according to those articles.
China won't be able to afford this; China's pretty broke already in 2016. It's approaching 300% debt ratio in combined corporate + government + individual. Its gross reserve is down to 3T (IMF believes China needs at least 2.5T to operate). Its net reserve (gross - debt) is down to 1.7T. It had a capital outflow of 1T again in 2016. Yuan fell the most in 2016, since 1994. Next year, Japan/US/EU is going to impose import tariff on China, and further crash China's economy.
I think they're milking the western economic structure of as much resources as they can, and will re-pivot to an alternative economic model once they have exhausted the world's willingness to fund it all.
China doesn't operate as some charity receiver for the west.
In fact it's the opposite, the west uses china for its hard labor and manufacturing tasks, and gets back products at a cheaper rate than itself can produce.
There's no "world's willingless to fund it" involved, there's that the world pays China $20 and gets back goods it packages and resells to its people (e.g. from Apple to Lacoste) as $50 and $100 goods.
And at great cost. It's an easy way to offset environmental devastation. Granted it's localized in China to some specific areas, but those areas are polluted to the point of destruction.
I think the US has proven that numbers on a spreadsheet mean literally nothing if you've got a strong enough military and control enough of the economic power of the globe. What are we going to do if they decide they're done being the US's manufacturing state? Like, if they literally halted all shipments to the US overnight. It would take us YEARS to rebuild in the US, and in the meantime people would be screaming bloody murder over here (I'm sure Walmart and Target would be thrilled to have bare shelves). It would collapse our economy as well.
4% by population of course, which is what you meant, but I think 40% of the world by wealth. While I understand what you mean by saying there are new middle classes being created from the other 96%, it seems like, absent another even more catastrophic economic screwup than we put ourselves through 8 years ago, American domination of the world market isn't going anywhere any time soon.
That's how much of China's GDP is dependent on exports to the US.
A significant paycut as it were, but hardly fatal.
(If they were to stop exporting to us, it would hardly be a fatal blow to us either. There is just not as much there in terms of percentage of GDP as everyone seems to think.)
They would have to cut off trade to much of the west as well, otherwise exports would simply be redirected. They could do USA did with Iran, and refuse to trade with anyone hat trades with the USA, but that is a losing proposition for them.
Basically, china cuti off trade with the USA would be a North Korea style action.
Does that include all the value created locally in order to be able to make those exports? Like food that people eat, vehicles that they have to drive, etc., That much drop in economic activity will surely trigger much worse outlook than you are alluding to.
No, not directly, but indirectly people would be afraid of further radical policy changes by China. Investors would move their money out of China. Or at least, that's what I'd do.
if they decide they're done being the US's manufacturing state?
What you're suggesting is essentially reverse-sanctions, and that would be a foolish move.
The economic "essentials" based on innate human needs are water, food, shelter (housing and clothes), and - in today's world - energy. The US has plenty of resources, space, and people to produce all four of those at home.
If China decided to shut down all manufacturing such that we would stop receiving all of our consumptive goods, electronics, etc... The US would take a hard look at what it really needs as a people and then decide to load balance its needs across both itself and other countries.
What would need rebuilt is all the infrastructure for automating supply chains, and such an aggressive economic move would be highly likely to unite the American people in a singular cause against their new economic foe.
The US has plenty of resources, space, and people to produce all three of those at home.
Eventually. Not immediately. Factories and supply chains and aren't built over night.
The US would take a hard look at what it really needs as a people
Or, much more likely, its people would flood the streets in anger and demand a return to normalcy.
In the mean time, black markets and therefore crime would explode.
Huge swaths of the economy, depending on Chinese imports in their supply chain, would cease to function. Unemployment would surge, throwing even more angry bodies onto the streets and even more desperate bellies into the Jail cells.
Fringe political movements would capitalize and the US would face an existential threat to its democratic heritage.
Skilled workers and those with large amounts of capital would quietly leave for greener pastures in the EU and stable parts of South America and Asia, making recovery that much more difficult.
At least, that's what typically happens when trade wars create extreme shortages of key goods and services (we have a lot of data points on this). Perhaps the USA is exceptional, but I wouldn't count on it...
This all is potential, but also seems to be based purely on your own opinion. Are you referencing a scenario that already happened in a different country?
Yes. Two give the two most relevant and potent examples:
ABCD in Japan prior to ww2.
Chile prior to Pinochet. Chile is agriculturally rich but suffered food shortages none the less.
Neither is exactly this scenario but there are enough similarities to suggest likely outcomes. People don't typically "toughen up and deal with" severe and abrupt changes to availability of common household items, and even countries with the potential for self sufficiency often have painful transitional periods.
In many of our lifetimes, see the Oil crisis in the 1970s when the ME embargoed the west. Go read up on that, it worked out well for the west and bad for the ME. People were pissed about having to wait in line for gas...for awhile...and carter lost re-election, but there were no angry people in the streets.
So ya, we do toughen up, and no, china doesn't have much leverage over the west at all, even less than the Middle East.
> Factories and supply chains and aren't built over night.
The US also has multiple trade partners around the world. China does not hold a monopoly on US imports. If anything, it's more of a final assembly point for many things, and the US could do more business with southeast Asia.
On top of that, the usual workings of supply and demand would make it quite profitable to divert $STUFF from another economy to the US. Heck, if China still traded any goods the rest of the world at all, firms in the rest of the world could just sell us back many of the exact same goods, with a competitive markup for the indirection, unless and until China puts a complete stranglehold on all its trading partners' deals with the US.
It'd be bad, but at worst it'd be more like 2008 bad than 1930s bad. People did "flood the streets" a little back then, of course (our friends at Occupy Wall Street). It was pretty easy to ignore, though.
Now, if we want to talk of the disruptions associated with an outright war, that's another matter, but we'll also have to worry about the war, which will likely be far worse.
I agree with you in every paragraph but the last and maybe even then. While the economy is obviously different than it was 70 years ago, what made the US so dominant in WWII was our ability to design and build things. In four years, we built something like 300,000 airplanes, 10,000 ships, an atomic bomb, etc.
An interesting story from that time period - German intelligence was reporting that the US had a locomotive that weighed 1.2 million pounds (including the tender) and could pull a 3,600 ton (US) consist of railcars up a 1.14% grade, and also run at 80 mph on flat land. This was the Union Pacific articulated Big Boy. And Hitler didn't believe such an engine was possible, much less that the UP had 25 of them in service. So he directed that the forecasts of American transportation exclude these "absurd" numbers.
> What would need rebuilt is all the infrastructure for automating supply chains, and such an aggressive economic move would be highly likely to unite the American people in a singular cause against their new economic foe
i want to argue the opposing side of this a little. i would argue that present-day America is actually extremely difficult to unite.
i don't believe the imagined "aggressive economic move" would unite the American people. "the American people" is just a diverse bunch of competing economic actors and political interest groups operating inside US geographical boundaries.
WWII is the last thing that really united "the American people" to the extent that you describe, and that was characterized by direct acts of war resulting in human fatalities (e.g. u-boats sinking ships in the Atlantic, Pearl Harbor, bombing raids on our British ally, etc).
a purely economic move like that is a lot less likely to unite the American people than an actual military attack. what's more, today, even real American human fatalities don't unite America. when the San Bernardino attacks happened, half the country was arguing for more gun control laws and the other half was screaming "Islamic fundamentalism." going to a larger event, did even 9/11 unite "the American people" in a way comparable to WWII? if it did, it didn't last long.
when i try to understand why, say, Apple, does its manufacturing in China, i read from various sources that it's not just cheaper labor, but also the availability of a very large number of engineers on short notice and the ability to build factories way, way faster -- no bureaucratic red tape and far fewer environmental reviews and roadblocks. i don't see a way to match that in the US system. a lot of people really love environmental protection laws.
i don't see where something as low-intensity and undramatic as "an aggressive economic move" by China would be enough to unite the people in an effort to repeal environmental laws and motivate sociology and psychology majors switch to EE and CS.
As an example to back up what you are saying, when the Middle East decided to embargo the west on oil, the west focused heavily on fuel efficiency and developing new oil resources, to the point that oil went bust for the most of the 80s and the Middle East hurt badly.
There are always options if the country is rich enough. The USA could redevelop manufacturing relatively quickly or even lean more heavily on Bangladesh, India, and Vietnam. All china would get out of it are newly developed competitors.
If China reverse-sanctioned the US, a significant portion of the Chinese population would fall into extreme poverty and starve. The Yuan would likely plummet, China would almost certainly face a national default, and it would risk a revolt against the current regime.
Meanwhile, within months, the US would have all its cheap shit imported from Thailand, Vietnam, Mexico--even Japan and Korea. We have enough retail reserves that aside from slight price increases on some inessential goods for a few months, likely nothing else would happen.
Because a large portion of the important and high-value stuff is not actually made in China, is is just assembled there. Your iPhone might be "made in China", but most of the parts that make it an iPhone are made in other countries. If you were to consider the things that we think of as being essential then the fraction of things that are made in China becomes even smaller. Yes, we would need to do without cheap bras and Levis for a short while, and the strategic plastic shit stockpile would dwindle, but the nation would somehow get through these dark days.
China, OTOH, would likely never recover from having all of its revenue generating export goods evaporate to other countries in SE Asia and elsewhere.
>What are we going to do if they decide they're done being the US's manufacturing state?
If China is done being the world's manufacturing state then inflation is going to go crazy and we'll experience something a bit like what we did with the 1973 oil crisis, except with manufactured goods. It would be a good time to set up a repairs shop.
If China is just done being "America's manufacturing state" then we'll see inflation but probably not as extreme - goods could still be shipped to "neutral" states and then shipped on.
In all likelihood if such a breakdown does occur it will form part of a tit-for-tat including shipping blockades, sanctions and proxy wars.
The question of which country loses more if the US and China stop trading probably doesn't need to be answered; both countries would lose so much that it won't happen abruptly.
Right, which is why everyone let the US slip by when the economy collapsed. If it were some African nation that had their entire housing market collapse, you really think the rest of the world would've just let it slide?
It's no different with China. The world can't afford to let their economy collapse, and so they won't. This isn't Russia we're talking about here, who for all intents and purposes is completely isolated outside of providing arms to the world, space launching (although that reliance is quickly going away), and cheap natural gas to Europe. If/when their economy collapses again, it will have almost no effect on the western world. If China collapses, we're all in trouble.
What are some concrete examples of Right, which is why everyone let the US slip by when the economy collapsed. happening?
My memory is that other parts of the world had their own economic problems at the same time as the US housing crisis and were paying the US government for the privilege of owning US treasury bonds (rates were 0 ish for quite a while).
On the other side of it, shrugging does seem to have been the standard external response to the currency crisis in Zimbabwe.
I dunno, the fact we literally manufactured a trillion dollars out of thin air and the dollar wasn't devalued? Can you cite any other nation doing similar with similar results? The mere SUGGESTION of financial instability as a result of Brexit has ruined the British pound.
*ruined is a bit strong, but it had a serious impact
When we were doing QE, everyone else was as well, so the dollar didn't fall much, but is still worth less. It was probably the right course of action, however, as it was managed well.
> US debt to GDP is not really different than other developed economies
Yes, the other developed economies which have largely given up on developing and embraced stagnation instead. It's not the greatest situation, especially if you're unfortunate enough to be young.
People have been saying China is going to crash for a couple of years now. I suppose if you say it every year, you'll eventually be right. All economies have downturns.
However, they already have 12,000 miles (20,000 km) of hsr that carries over 1 billion passengers a year. Most of this was built in a little over a decade. So, it's not a stretch for them to continue at this pace. According to the WSJ, they've spent $120 billion in 2015 and 2016 on hsr. That means that spending is about the same until 2020.
The 1.5 miles first stage of the 2nd Avenue Subway opens tomorrow. That took 9 years and $4 billion. My bet is that China will have 10,000 more miles of hsr before the rest of the 8.5 mile 2nd Ave Subway is finished
> People have been saying China is going to crash for a couple of years now. I suppose if you say it every year, you'll eventually be right. All economies have downturns.
Actually people (especially those in the west) have been saying China is going to crash for a couple of _decades_
>The 1.5 miles first stage of the 2nd Avenue Subway opens tomorrow. That took 9 years and $4 billion. My bet is that China will have 10,000 more miles of hsr before the rest of the 8.5 mile 2nd Ave Subway is finished
China's saving rate remains at 45% of GDP. Most other countries have it around 10-15%. Savings have to go somewhere, and this is why China accumulates debt. Every yuan of savings turns into one-plus yuan of debt. The current debt ratio adjusted for savings is comparable to the US's, for example. Unlike US, they put it into infrastructure because people don't spend growing income on consumption.
To put it simply, the US worker gets a salary and buys a car, while the Chinese worker makes a deposit in a bank for a construction firm to borrow and build a railroad. Both cases describe transportation services, but they look very different in national accounts.
As for the exchange rate, it's not that relevant for local investments since China's going to pay in yuans anyway.
That is a very old number and anyways only comes from consumers who are not consuming but saving for emergency health care, or increasingly unaffordable housing. China desperately needs for its consumers to actually consume to move away from an export oriented economy, which is especially sensitive to trade friction.
So yes, you are talking about China's biggest problem (inability to consume what they produce) that even the Chinese leadership has acknowledged is a huge problem.
Whether china can afford this or not is less relevant than "bang for the buck", china has already built out lots of HSR, some of it very lightly utilized (my own trip from Beijing to a city in south Hunan, the train was mostly empty most of the time). China builds mostly as a stimulus program, because if consumers aren't consuming its one of the only tools they have, but also focuses on flashy projects that they can brag about in articles like this. However, much of this infrastructure is going to be underutilized for decades, while really needed infrastructure, like adequate flooding drainage, doesn't provide enough "face" to be considered instead. So every year, we see pictures of flooded out cities...but at least you can get to them quickly on empty trains!
Good question. The right aways are important and quite persistent, but the bridges and tack will need to be maintained/rebuilt/upgraded periodically no matter how much they are used.
If you only know the top number but not the bottom one, you can't really compute utilization. Also, spring festival (Chinese new year) means much of the utilization comes "all at once", so the trains are packed for a few weeks each year, but can be much more empty the rest of the year. Anyways, it isn't as simple as laying more tracks between cities.
>In 2013, Chinese high-speed traffic reached 214 billion passenger-km, slightly more traffic than the rest of the world's high-speed networks combined
>the CRC network is already one of the most densely used in the world, with robust growth between 2009 and 2013. Overall passenger traffic grew by 5.5% per year during this period reaching 2.1 billion passengers or 1060 billion passenger-km in 2013. Railfreight grew by 6% per year to 3.6 billion tonnes, or 2633 billion tonne-km in 2013. These are large volumes compared with the size of the network (103,100km in 2013).
> Although the railway authority has said that the Beijing- Shanghai high-speed railway was the only profitable high-speed rail in China in the past five years, some believe that other lines in densely-populated and developed regions will likely become profitable soon.
Only Beijing to Shanghai is making a profit ATM (flying is still cheaper on that route, but airport delays are way too bad).
All I'm hearing is anecdotes, which is fine if there's no data, but when it doesn't jive with what other data says, I'm not really going to trust the anecdotes over what the data says.
>That is a very old number and anyways only comes from consumers who are not consuming but saving for emergency health care, or increasingly unaffordable housing.
They're still saving and those savings keep a lid on Chinese inflation which makes projects like this affordable.
>China desperately needs for its consumers to actually consume to move away from an export oriented economy, which is especially sensitive to trade friction.
There's a lot of talk in the CCP about shifting China's economy to becoming more consumer driven but there isn't a lot of appetite to actually do the things which would make that happen - namely some sort of social security/nationalized health insurance system.
The Chinese will thus continue to be terrified of getting old and sick and will and save accordingly, and those savings will no doubt continue to get recycled into projects like this as well as subsidizing state run SMEs with cheap loans.
I agree with this. Savings keep a lid on inflation but also distort money supply and demand, just like the real estate bubble distorts supply and demand for housing. A lot of distortions with temporary fixes to keep things going.
2017 will be very interesting. Can't wait to see what happens in Tuesday.
I've always wondered about that oft cited savings rate. How is it even calculated? I worked at a startup trying to generate credit scores for a significant portion of Chinese citizens. Unless our company was completely incompetent, it was pretty ingrained in us that the majority of people in China either don't have access to banking or choose not to bank. Also, it seemed like the vast majority of Chinese citizens lived paycheque to paycheque. So how does one calculate this savings rate figure? Is it just the difference between earnings and expenditures of the entire country?
They sure do and you only have to look at Australia, US, and Canada where it ends up. The Chinese keep most of their money in either cash or real estate. They don't trust banks.
>"To put it simply, the US worker gets a salary and buys a car, while the Chinese worker makes a deposit in a bank for a construction firm to borrow and build a railroad."
Have you been to Beijing recently? I can assure you the Chinese worker is also buying a car. China has the highest automative sales of anywhere on the planet.
Yes, and if you talk to most people, they can't dream of affording a car, let alone in Beijing. It's insanely expensive, not even including the permit[1]. Maybe if you're in Beijing talking to rich people or just looking at the traffic in abject horror, it looks like everyone is buying cars.
China, per capita, has like one fifth or one sixth as many cars as the US. There's like one car per 10 people.
[1] and by permit I don't mean the actual cost of getting a Beijing plate through normal channels (which has like a <0.2% chance of actually working due to the lottery). I mean if you actually want to guarantee that you get a car, be prepared to grease the wheels with lots of money. Shit idk how that even works with Xi Jinpings rampage against corruption, I don't think they've gotten that low of a level yet (still going after higher-ups).
Per capita is correct. There are really two Chinas, a richer china that consumes a lot and saves comparatively little, and a commoner class that has no choice but to keep saving.
If you want to get a permit in Beijing and have money, buy a Tesla. The quota for elctric vehicles is higher than for gas, so you see a lot of rich people in Teslas these days, something unthinkable only a couple of years ago.
<the Chinese worker makes a deposit in a bank >
From what I've heard, banks make loans to friends and politically connected to invest in projects who also siphon a lot of the money away- and when the project fails, the loans are written off. Which is why the public doesn't trust their money with the banks anymore.
This is the sad thing about China's boom: it's paid for by the common worker, but it all ends up owned by the richest of the rich. It's a plutocrat's dream.
Another top official in the Railways Ministry, Zhang Shuguang, was
also sacked for corruption. Zhang was estimated to have misappropriated
to his personal overseas accounts the equivalent of $2.8 billion.
Every RMB in someone's savings is offset by another RMB of someone else's debt. The savings rate isn't really as relevant as how productively that savings is utilized by the debtor on the other side of that balance sheet.
For example I can save 50% of my income but if i lend to a 90 year old who uses it to fund an elaborate funeral my savings means little.
Other metrics in China suggest that a lot of investment in China since 2008 hasn't been productive. This pattern isn't limited to China but is common in every country who has gone through rapid debt expansion including the US. Finding productive investments takes work and talent and economies have natural limits on investment opportunities that aren't purely monetary.
True but it is better to go broke investing in creating and fixing internal systems and improvements than external or some war where you will be in debt for decades.
Oh America at least has an immense infrastructure backlog. Roads, bridges, water systems. Especially water systems! They get neglected until they break, then its a five-alarm emergency to get the pumps going before everybody has a living room full of sewage.
My relative worked at Crane Pumps for years; every order was a fix-on-failure emergency order. For pumps designs that went back 50 years - they were commonly pulling plans on paper out of drawers in storage rooms to match exactly the specs for some ancient pump in Pocatella or Poughkeepsie.
When Obama had that shovel-ready infrastructure effort, they expected a big upswing in business. But nope; nothing. Probably because water systems are underground and invisible. They wanted splashey visible activity like road-building. Which IMHO accomplished exactly the opposite of what was intended - they built MORE infrastructure to support.
> ... they were commonly pulling plans on paper out of drawers in storage rooms to match exactly the specs for some ancient pump in Pocatella or Poughkeepsie.
That is awesome. Thank you for the info.
When a company like Crane Pumps goes out of business because cheaper imports take over its market, all that information (the paper plans from past pump designs) probably gets lost forever. Once the company folds, these small cities all over the country cannot replace their old pumps and instead have to upgrade the system to make it compatible with a new pump model.
I wonder if global trade economists account for that additional cost to the customers when the old domestic supplier goes away.
But remember the US has first world problems. Chinese were absolutely baffled by the Flint water crisis....why would stupid Americans think tap water was safe to drink even after boiling?
Drainage in the USA is also a magnitude better than in china. I'm sure hey could use upgrades, and I'm sure there is a bias to showy projects, but it is nothing compared to what happens in the guo.
in reality the bank will force you into bankruptcy, seize all your assets because they're at the top of the payback list, and blacklist you from ever running a business or borrowing money again.
Except if you owe the bank a billion it is unlikely you actually have a billion in assets they can get their hands on. A bank that tried this to someone who owed them that much would soon find the auditors coming to visit and setting up shop for quite a while. The former management of this bank that went bust and was shut down by banking regulators is unlikely to have much leverage when it comes to blacklisting you...
>in reality the bank will force you into bankruptcy, seize all your assets because they're at the top of the payback list, and blacklist you from ever running a business or borrowing money again.
You'd be surprised. People have recovered from such "bankcrupcies" time and again, including the current POTUS.
Collection of debt must be enforced by violence. Always. In developed countries we've scaled down the violence (we black list your credit, take your house and do not loan to you again instead of breaking your legs or killing your children), but there is still some level of violence.
It's not a cliche. It's reality. If you loan someone an insane amount of capital and are dependent on a return on that capital to keep your bank solvent, you are now dependent on them (e.g. "To Big to Fail") for your own business to not collapse. Interestingly enough, you can only extend credit to someone if you consider them an equal, at least at first. Removing this equality is how you can turn a person into property.
Debt and guilt are the same word in many languages (such as German) and debt has a large moral social construct attached to it (which is why people are hesitant to walk away from debt, even when the value of a house exceed what they'd pay on a load).
I highly recommend reading the book Debt the First 5,000 Years. It's the most comprehensive book I've read on the history of money, debt and slavery. They are all very closely related, and it will change the way you look at states, money and markets.
By looking at their economies I can say with certainty that Japan and the EU are nowhere close to imposing trade tariffs on anyone, they can't afford to. Maybe the US is willing to play these games hoping it would win some (geo-)political points, but at the end of the day is a lose-lose situation for all those involved.
"The Chinese government will invite private investment to participate in funding
intercity and regional rail lines"
This is how Europe has been doing it despite heavy public debt. In this plan, China will setup public-private partnerships to raise capital. Also, the article also mentions functional privatization efforts, a new precedent for Chinese rail, which opens the door for more investor capital:
"Earlier this year, China turned to a private company for first time to operate an
inter-city rail service on the mainland"
I think this is super cool contrast with the US government's decision to expand the interstate highway system after WWII. While highways certainly were able to connect American cities in ways which were never before possible, the bet on cars has had long-term repercussions, arguably contributing to the failing of many American metro commuter rail systems which, in turn, created the traffic problems that plague places like New York and LA.
I would be shocked if this doesn't improve the lives of the average Chinese citizen, and I think it likely that a long-term move towards public transportation will help China meet its carbon emissions goals.
I wonder if this will have the side effect of enriching and stabilizing the Central Asian countries. Many of them were quite rich in the days of the Silk Road and basically starved when China went down and most trade moved over to ships.
The state of American rail is tragic. People continually make excuses about how America isn't structured for rail, but that happened systemically over the course of decades. Most small cities had street cars, but they were removed around the 1950s or 60s.
Interstate highways barrelled their way though the hearts of cities, destroying poor/low-income neighbourhoods. If at any time US policy makers decide to push for rail, we could see dramatic turnarounds over the course of the next two decades.
Seattle is building ST3 and California is building its high speed network. It's a start, and we're still ahead of Australia when it comes to inter-city rail, but no where near close for urban/light rail (which every Australian state capitol has except Darwin and Hobart).
By comparison, Russia is less densely populated, yet they have a both better high speed rail and last-leg commuter rail between/in major cities and they are actively expanding their high speed systems.
Self driving cars are realistically a decade away and they cannot solve the capacity problem:
The US has one of the best freight rail systems in the world. As a country we ship freight not people. Its not tragic, its damn amazing. I'm sorry they didn't specialize it for the use case you want.
Meanwhile, we're stuck with a ruling party that is absolutely against anything involving steel tracks, so we have to spend similar amounts just to maintain our roads.
Does the US need more railway lines? The US already has ~2 times the railway lines of China with virtually identical area (~3.7M square miles).
FTA:
"At the end of 2015, China had 121,000 kilometers of railway lines,
including 19,000 kilometers of high-speed tracks, according to a
transportation white paper issued Thursday. The U.S. had 228,218 kilometers
of rail lines as of 2014, according to latest available data from the World
Bank."
I think the US officially has 26 miles of HSR. China transports 1.1 billion people a year on HSR. Amtrak carries about 30 million people a year. Why don't more people take Amtrak? It's faster to drive.
> absolutely against anything involving steel tracks
Steel tracks are doing just fine in the US, thank you very much, with minimal governmental involvement. Our rail system is the envy of the world, and has been getting new investment to the tune of $25 billion a year of late. This is why Berkshire Hathaway bought BNSF, so they could have a place to reinvest billions of dollars of profit and earn a return.
All freight rail, of course.
Mind you, regulatory creep threatens this. The FRA has been pushing for "safety" rules which are basically handouts to labor unions (requiring extra headcount per train), and Positive Train Control's top-down bureaucracy-driven technology-solutioning has been a comedy of errors, but the real threat they're facing is the potential of a mandate to make all freight trains make way for passenger trains. which no one will use.
If anything, the Trump administration will be much better for steel rails than the past eight years. Still freight rails, of course. But unlike theoretical passenger rail proposals, these ones are already popular and profitable and reducing carbon emissions.
72% of the miles traveled by Amtrak trains are on tracks owned by other railroads. For example, Amtrak uses BNSF rail (your example) and pays for BNSF rail. That amounts to about 6.8 million train miles for BNSF rail alone.
We subsidize rail (freight+passenger) just as we subsidize airlines. Let's just be honest about it.
BTW, your notion of the FRA over-regulating for unions is similarly malarkey. And envy of the world? Dunno if you've been to Europe (which is heavily regulated).
European (freight) rail falls apart the moment you cross any internal border: differences in train control systems, electrification standards, signalling systems, loading gauges, and the like. France, Spain, and Germany alone have four different electrification systems among them.
> We subsidize rail (freight+passenger) just as we subsidize airlines. Let's just be honest about it.
Sure. Is this actually a point of contention? It'd be great if we could stop, anyway, and let various forms of transportation compete on true merit rather than on which one the politicians prefer. Especially for freight. There are various barriers to this happening, naturally. It'd be great if they could be reduced and any externalities mitigated.
And the subsidies don't nearly approach the ~$25B/yr new investment.
> BTW, your notion of the FRA over-regulating for unions is similarly malarkey.
I refer you to 81 FR 13917, in which the agency itself admits in the filing, "FRA has no empirical evidence to suggest" that two-person crews are safer, admitting that "in fact, it is possible that one-person crews have contributed to the improving safety record".
That's just a tiny piece of what they get to deal with, anyway.
Finally, railroads have achieved an improving safety record
during a period in which the industry largely employed
two-person train crews.
Maybe when Positive Train Control (which you refer to as a Comedy of Errors) is fully in place, you might be right and train crews could be reduced. Until then, you're essentially saying that 1 person crews are enough because Labor Unions. Calculate how much that labor is costing as a percentage of the train revenue and get back to me. I doubt Warren is looking that far past the decimal point.
Basically, you sound anti-labor and anti-regulation. Just say it.
BTW, outside of Spain's Iberian gauge, I'm not aware of any inter-country freight problems.
> BTW, outside of Spain's Iberian gauge, I'm not aware of any inter-country freight problems.
Loading gauge, not track gauge. Here in Britain, Network Rail's standard W6a gauge is too small for standard shipping containers on standard cars. You need to get up to W8 for that, and W10 for High-Cube. They have that on certain corridors only. You can use special low-deck cars to get around it, of course, though those are heavier and more expensive to own and operate.
Meanwhile in the US, all that investment cash has made double-stacked container transport the norm rather than the exception. Do not expect to see it in Europe in either of our lifetimes.
Amtrak then overpays for this use which amounts to a government
subsidy.
http://www.eenews.net/stories/1060015115
Respectfully, you and I read different articles. Amtrak overpaid out of incompetence. Amtrak paying more due to incompetence isn't a government subsidy.
FTA: Amtrak wasn't formally reviewing invoices, some of the alleged over-payments lack supporting documentation, and in general, it sounds like there's STILL disagreement over contract language.
If anything, the taxpayers subsidized management negligence.
The country that had twelve rail accidents in 2016, the envy of the world?
The USA isn't the envy of the world for anything these days. Only Americans think that. Nobody envies you for anything, not even Silicon Valley, with the housing crisis and poverty surrounding it.
But if you don't trust the Americans let's ask the Brits.
http://www.economist.com/node/16636101 (The Economist) - "America’s system of rail freight is the world’s best" and "They are universally recognized in the industry as the best in the world."
It's a fact generally acknowledged. I'd find you more variety but it's harder to get detailed Asian and European perspectives in English, you know?
That said, I sure hope no one envies Silicon Valley. An individual facet of it like the jobs or the climate, maybe...
The Time article is interesting although it is an Opinion piece. It correctly points out that our passenger system is a joke, although an improving joke.
As for the best of the best, I just kinda think Deutsche Bahn has us beat. And Japan. And Switzerland ...
the sidenote being that they'll probably develop nuclear power to power all those trains, and become the first nuclear powered economy. they'll both developp energy,transportation and reduce their pollution.
There is no evidence for that. Coal in plants without decent scrubbers still reigns supreme in china; nuclear has been slow to develop because even the Chinese don't trust themselves enough to do it. Successfully developing nuclear power requires not only lots of capital, but also a culture of honesty, transparency, and non corruption (heck even Japan has screwed that up).
Damn I wish the US would do this. Both because I've been taught that infrastructure spending is a good idea, and because I fucking love riding trains.
Seriously, is a 2 day sleeper HSR from SF to new York with damn good internet really less productive meams of emloyee transport than trains? You spread out the pain of time zone shifts, avoid all the bullshit at airports, an and work much more effectively.
I think I rather take a train for any trip short of being intercontinental, and would be a more productive worker because of it.
I live in Atlanta but originally from South Florida. Spent 13+ hours (lots of stops with a baby) driving for the holidays to see family. I would have much rather done a train and rent a car for a few days. Unfortunately, the Republican governor of Florida rebuffed any thought of high speed rail because it's from Obama.
Trump has an infrastructure plan, maybe he'll see that China and Europe has better trains and that would spur him to propose HSR (being cynical, but he can power it by coal since he wants to bring back coal to the US :) )
Agreed. In the US, our lack of infrastructure spending has been a Republican effort to stymie Obama. Now suddenly they want to spend on infrastructure.
I would challenge that narrative, because Trump clearly wasn't "The Party's candidate". He was a populist candidate, and populists gon spend (or at least say they are).
There still seem to be deep misgivings within his cabinet about the spending, but Trump seems to tend to get what he wants, and is quick to fire people who aren't making it happen, so...
You're saying that it existed before and that it opposed infrastructure spending doubtfully out of heartfelt principle. Now that the Republican Party candidate has been elected, does this wing still exist? If it exists then surely it can be depended on to resist any large government infrastructure spending that a populist candidate would propose.
With the scare quotes, I was drawing a distinction between the pre-Trump Republican establishment [meaning the incumbent Republican leadership along with the ideas that they stumped on to get into that position], and Trump. Trump is very different than the pre-Trump Republican establishment, and they clearly preferred other candidates (principally, Marco Rubio).
There were clearly vast distances between the Pre-Trump Republican establishment, and the Republican electorate, and so it would make sense for the post-Trump Republican establishment to move in Trump's direction. That process is currently nascent, and the differences have, if reports are anything to go on, yet to have shaken out.
Because of the way Trump operates, and because of the populist shift of the Republican electorate, I'd expect Trump to win most of the internal battles on spending. The winds are at his back. He will probably also flip many Republicans who previously positioned themselves as staunch fiscal hawks.
So you're saying that the principled opposition by the small government wing will wilt in the face of populism, wind at his back and whatnot. You're right about this, except for the principled part.
Close. I wasn't claiming that it was principled. I was claiming that it's what they stumped on in course to their leadership positions. Reversing themselves on those positions violates the narrative that they've been crafting, which probably has negative political consequences.
It wasn't principled and so the pivot to infrastructure spending will come without any political consequences because the Republican opposition was strictly partisan. It wasn't against the idea of improving infrastructure. It was against who was improving infrastructure.
If Colin Powell and Condoleezza Rice do something, that's OK. If Hillary does the same thing, it's treasonous. Got it?
One theory is that China spends heavily now to build up the infrastructure while the labor cost is cheap. Once labor cost has reached certain level, these kinds of projects will be prohibitively expensive, just like in Japan or in U.S.
It makes sense, but I also wonder how much they're really saving by building the infrastructure now and then having to maintain it. One of the greatest lessons SimCity teaches about infrastructure is that you've got to pump a minimum amount of money into the transportation department for your roads -- with very little wiggle room -- or everything seizes up and goes to shit. Even not being used, that stuff costs money, and I can't imagine that a half-trillion-dollar rail project won't need a ton of maintenance. I guess the rights-of-way issues would be much easier to sort out now rather than later, too.
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[ 3.0 ms ] story [ 239 ms ] threadOtherwise, it may be able to take advantage of anti-immigrant sentiment in the developed world. That's what intrigued me about your point. China has started to invest in African infrastructure, so why not leverage that to supplement its population when the aging curse kicks in?
Perhaps because the entity is not "China", a state, but China, a culture and a specific population with a shared history etc? So arbitrarily supplementing the population as a means to keep it going doesn't make sense?
Edit: Anyway, it's besides the point: we were clearly talking about China the state (the same one that built those empty cities).
[1]: https://en.wikipedia.org/wiki/Xinjiang
I'm only recognizing that there is a Chinese culture that has been shaped by various forces (including population migration, trade, and even war and invasion) over long historical periods (keyword: long).
Which doesn't translate to some "Since we had e.g. the Mongols in the 13th century, and they are now part of Chinese culture, it's no biggie to just get some hundreds of millions of people that don't share our culture to replace our aging population" -- any more than "Since we were subjects to the Queen before 1776 it's no biggie to subject ourselves to being a UK colony again".
>Maybe I've heard wrong, and there are in fact no substantial differences between Beijing, Shanghai, and Hong Kong
That only matters if they are also more substantial than those between "Beijing, Shanghai, and Hong Kong" to Berlin, Phoenix, Santiago, Accra or London.
Otherwise, all, or almost all, countries have regional differences within the country's culture. Beijing and Shanghai are not more different than, say, New York and Savannah or New Orleans and the Quad Cities. As for Hong Kong that has been, for over a century, shaped from being a UK colony.
I'd also submit that constructing buildings which never get occupied (or don't get occupied until they begin falling into a state of disrepair) is totally senseless regardless of scale.
You can read the Wikipedia page on these for the actual reasons they happen[1]. It's all about Chinese local governments selling property to speculators to raise revenue and the speculators having to build to hold them rather than just sitting on the lots like regular capitalist speculators can. This does represent an inefficient use of resources but not a huge one, past ghost towns have all been filled eventually. Rapid growth covers a multitude of sins. Goodness knows what'll happen when the growth slows, as it must, but there's no particular reason to think that'll happen soon.
This is yet another way that China looks like early 19th century US. Not only are they copying industrial designs a la Samuel Slater and industrializing rapidly, they're financing local government via land speculation the way we did in the US back then. Hopefully when they have their equivalent of the panic of 1839 they'll make similar reforms.
[1]https://en.wikipedia.org/wiki/List_of_under-occupied_develop...
At first glance your comment sounds great, yeah China is just anticipating demand, but it seems much more likely it was a wonton spending spree to help the economy continue on. With that spending spree coming to a halt, now China has millions of steelworkers, miners, construction works, etc... out of work.
Nobody is going to want to live in those cities because they want to live in established cities. Ask yourself, if the goal was to anticipate demand, why wouldn't you do all of this construction alongside established cities? Why would you often times do it in the middle of nowhere?
And the new plan going forward is to 'urbanize' already-existing places, which means building an urban center around an existing town. So it can expand outward, starting with a core of city services and administration.
You can see the same thing happening in central London, Vancouver and New York on a smaller scale. Plenty of housing in upscale neighborhoods bought as an investment and left empty.
http://www.cnn.com/2012/01/20/world/asia/china-florcruz-urba...
We have 50 MSAs with 1 million+:
https://en.wikipedia.org/wiki/List_of_Metropolitan_Statistic...
I think they aren't the right comparison either but quite a few cities are at the center of a larger built up area.
http://www.businessinsider.com/these-chinese-cities-are-ghos...
http://www.forbes.com/sites/wadeshepard/2016/04/23/chinas-la...
Sounds like they build them first then move in the people. Probably cheaper and faster that way? They do have 1.3 billion people.
http://www.newsproject.org/node/181/
All the consolidation meant that banks gained a lot of money, and the US government bought debt $1 for $1. Instead of TARP, the US government could have done something for...the people you know? The attorney general could have pushed prosecuting all the people who committed fraud (forging income documents for home loans was rampant, lying to people about home loans, etc.) from the top to the bottom. Banks should have been forced to sell loans back to consumers for quarters on the dollar (you know, what the homes were actually worth now).
We saved some retirement accounts, and everyone above 50 at the time was very thankful for that, but young people lost their homes, tons of money and the banks didn't take a hit at all. They just got stronger and swallowed other banks.
[0] http://www.investopedia.com/terms/s/sharperatio.asp
your statement is good, but only in hindsight. we didnt have that forethought before the crash. its a useless statement.
Sorry to go meta and off-topic, but I'm curious about this sort of sentence because I seem to be seeing it more and more. It seems like you're making a statement, but then it is finished with a question mark. Are you asking whether the statement is true? I don't think so. My interpretation, which I think is based on similar things in colloquial speech, is that you're implying a question like, "you know that the Iraq war cost around 1 to 2 trillion dollars, right?". Is that how this is meant? Is there a name for this sort of statement-question?
> But Iraq war cost around 1 to 2 trillion dollars, right?
That question mark is not really necessary.
I recall when an economist said, as the war was ramping up, that the cost will be in the trillions. The wise guys in the Bush administration and the military said he was yapping out of the back of his neck. They put the final cost at a few hundred billion.
Turns out the guy was right.
His math included the cost of taking care the vets. That part of the cost will keep going up until all the vets are all dead.
Meanwhile, we're back in Iraq in some fashion.
They actually put the cost at $50-60 billion.[1]
http://www.nytimes.com/2008/03/19/washington/19cost.html
I recall members of the Bush admin telling requesting Congress to fund the war to the tune of $50 billion, that the cost to America wasn't going to be more than that and that because Iraq has oil, the rest of the cost will come from Iraqi oil revenue.
Not too long after that, if I recall correctly, they came back for another $75 billion (?) or so. And that was not the last time.
You hear that number trillion dollars so often that you become numb to it, but the annual tax revenue for u.s. was somewhere around 2.8 trillion.
Just imagine that. 90 million working Americans, from poor to filthy rich, working entire year, some paying quarter or third of their earnings, some companies paying billions in tax. And still amount amount to less than $3 trillion.
It's quite fascinating how fast growth in the world is in general. It reminds me of a talk about the speed of the "seemingly small" 7% per year growth.
https://www.thelocal.de/20161229/german-rail-giant-steps-up-...
But Russia cut _all_ gas supply, stopping gas flow to Germany and other customers.
There is another line is spinning up too - through Caspian Sea, Turkey, etc.
>It seems people forgot that Russia is always threatening with cutting the gas supply.
Russia is an opportunistic bully. The key thing to success here is to know whom you can bully around and whom you can't. Germany is of the latter :)
[0] https://www.google.de/amp/s/amp.welt.de/amp/wirtschaft/artic...
China doesn't operate as some charity receiver for the west.
In fact it's the opposite, the west uses china for its hard labor and manufacturing tasks, and gets back products at a cheaper rate than itself can produce.
There's no "world's willingless to fund it" involved, there's that the world pays China $20 and gets back goods it packages and resells to its people (e.g. from Apple to Lacoste) as $50 and $100 goods.
That's how much of China's GDP is dependent on exports to the US.
A significant paycut as it were, but hardly fatal.
(If they were to stop exporting to us, it would hardly be a fatal blow to us either. There is just not as much there in terms of percentage of GDP as everyone seems to think.)
Basically, china cuti off trade with the USA would be a North Korea style action.
What you're suggesting is essentially reverse-sanctions, and that would be a foolish move.
The economic "essentials" based on innate human needs are water, food, shelter (housing and clothes), and - in today's world - energy. The US has plenty of resources, space, and people to produce all four of those at home.
If China decided to shut down all manufacturing such that we would stop receiving all of our consumptive goods, electronics, etc... The US would take a hard look at what it really needs as a people and then decide to load balance its needs across both itself and other countries.
What would need rebuilt is all the infrastructure for automating supply chains, and such an aggressive economic move would be highly likely to unite the American people in a singular cause against their new economic foe.
Eventually. Not immediately. Factories and supply chains and aren't built over night.
The US would take a hard look at what it really needs as a people
Or, much more likely, its people would flood the streets in anger and demand a return to normalcy.
In the mean time, black markets and therefore crime would explode.
Huge swaths of the economy, depending on Chinese imports in their supply chain, would cease to function. Unemployment would surge, throwing even more angry bodies onto the streets and even more desperate bellies into the Jail cells.
Fringe political movements would capitalize and the US would face an existential threat to its democratic heritage.
Skilled workers and those with large amounts of capital would quietly leave for greener pastures in the EU and stable parts of South America and Asia, making recovery that much more difficult.
At least, that's what typically happens when trade wars create extreme shortages of key goods and services (we have a lot of data points on this). Perhaps the USA is exceptional, but I wouldn't count on it...
ABCD in Japan prior to ww2.
Chile prior to Pinochet. Chile is agriculturally rich but suffered food shortages none the less.
Neither is exactly this scenario but there are enough similarities to suggest likely outcomes. People don't typically "toughen up and deal with" severe and abrupt changes to availability of common household items, and even countries with the potential for self sufficiency often have painful transitional periods.
So ya, we do toughen up, and no, china doesn't have much leverage over the west at all, even less than the Middle East.
The US also has multiple trade partners around the world. China does not hold a monopoly on US imports. If anything, it's more of a final assembly point for many things, and the US could do more business with southeast Asia.
On top of that, the usual workings of supply and demand would make it quite profitable to divert $STUFF from another economy to the US. Heck, if China still traded any goods the rest of the world at all, firms in the rest of the world could just sell us back many of the exact same goods, with a competitive markup for the indirection, unless and until China puts a complete stranglehold on all its trading partners' deals with the US.
It'd be bad, but at worst it'd be more like 2008 bad than 1930s bad. People did "flood the streets" a little back then, of course (our friends at Occupy Wall Street). It was pretty easy to ignore, though.
Now, if we want to talk of the disruptions associated with an outright war, that's another matter, but we'll also have to worry about the war, which will likely be far worse.
I'm reading A World at Arms (https://www.amazon.com/World-Arms-Global-History-War/dp/0521...) at the moment, and what has struck me most so far is what a mistake the Axis made underestimating American manufacturing mobilization.
Today, I'm not sure if we could ramp up actual production as quickly.
http://www.steamlocomotive.com/bigboy/
i want to argue the opposing side of this a little. i would argue that present-day America is actually extremely difficult to unite.
i don't believe the imagined "aggressive economic move" would unite the American people. "the American people" is just a diverse bunch of competing economic actors and political interest groups operating inside US geographical boundaries.
WWII is the last thing that really united "the American people" to the extent that you describe, and that was characterized by direct acts of war resulting in human fatalities (e.g. u-boats sinking ships in the Atlantic, Pearl Harbor, bombing raids on our British ally, etc).
a purely economic move like that is a lot less likely to unite the American people than an actual military attack. what's more, today, even real American human fatalities don't unite America. when the San Bernardino attacks happened, half the country was arguing for more gun control laws and the other half was screaming "Islamic fundamentalism." going to a larger event, did even 9/11 unite "the American people" in a way comparable to WWII? if it did, it didn't last long.
when i try to understand why, say, Apple, does its manufacturing in China, i read from various sources that it's not just cheaper labor, but also the availability of a very large number of engineers on short notice and the ability to build factories way, way faster -- no bureaucratic red tape and far fewer environmental reviews and roadblocks. i don't see a way to match that in the US system. a lot of people really love environmental protection laws.
i don't see where something as low-intensity and undramatic as "an aggressive economic move" by China would be enough to unite the people in an effort to repeal environmental laws and motivate sociology and psychology majors switch to EE and CS.
There are always options if the country is rich enough. The USA could redevelop manufacturing relatively quickly or even lean more heavily on Bangladesh, India, and Vietnam. All china would get out of it are newly developed competitors.
Meanwhile, within months, the US would have all its cheap shit imported from Thailand, Vietnam, Mexico--even Japan and Korea. We have enough retail reserves that aside from slight price increases on some inessential goods for a few months, likely nothing else would happen.
China, OTOH, would likely never recover from having all of its revenue generating export goods evaporate to other countries in SE Asia and elsewhere.
If China is done being the world's manufacturing state then inflation is going to go crazy and we'll experience something a bit like what we did with the 1973 oil crisis, except with manufactured goods. It would be a good time to set up a repairs shop.
If China is just done being "America's manufacturing state" then we'll see inflation but probably not as extreme - goods could still be shipped to "neutral" states and then shipped on.
In all likelihood if such a breakdown does occur it will form part of a tit-for-tat including shipping blockades, sanctions and proxy wars.
http://www.tradingeconomics.com/country-list/government-debt...
The question of which country loses more if the US and China stop trading probably doesn't need to be answered; both countries would lose so much that it won't happen abruptly.
It's no different with China. The world can't afford to let their economy collapse, and so they won't. This isn't Russia we're talking about here, who for all intents and purposes is completely isolated outside of providing arms to the world, space launching (although that reliance is quickly going away), and cheap natural gas to Europe. If/when their economy collapses again, it will have almost no effect on the western world. If China collapses, we're all in trouble.
My memory is that other parts of the world had their own economic problems at the same time as the US housing crisis and were paying the US government for the privilege of owning US treasury bonds (rates were 0 ish for quite a while).
On the other side of it, shrugging does seem to have been the standard external response to the currency crisis in Zimbabwe.
*ruined is a bit strong, but it had a serious impact
Yes, the other developed economies which have largely given up on developing and embraced stagnation instead. It's not the greatest situation, especially if you're unfortunate enough to be young.
However, they already have 12,000 miles (20,000 km) of hsr that carries over 1 billion passengers a year. Most of this was built in a little over a decade. So, it's not a stretch for them to continue at this pace. According to the WSJ, they've spent $120 billion in 2015 and 2016 on hsr. That means that spending is about the same until 2020.
http://blogs.wsj.com/chinarealtime/2016/07/20/chinas-busiest...
The 1.5 miles first stage of the 2nd Avenue Subway opens tomorrow. That took 9 years and $4 billion. My bet is that China will have 10,000 more miles of hsr before the rest of the 8.5 mile 2nd Ave Subway is finished
Actually people (especially those in the west) have been saying China is going to crash for a couple of _decades_
>The 1.5 miles first stage of the 2nd Avenue Subway opens tomorrow. That took 9 years and $4 billion. My bet is that China will have 10,000 more miles of hsr before the rest of the 8.5 mile 2nd Ave Subway is finished
And this is exactly why it won't!
To put it simply, the US worker gets a salary and buys a car, while the Chinese worker makes a deposit in a bank for a construction firm to borrow and build a railroad. Both cases describe transportation services, but they look very different in national accounts.
As for the exchange rate, it's not that relevant for local investments since China's going to pay in yuans anyway.
So yes, you are talking about China's biggest problem (inability to consume what they produce) that even the Chinese leadership has acknowledged is a huge problem.
Whether china can afford this or not is less relevant than "bang for the buck", china has already built out lots of HSR, some of it very lightly utilized (my own trip from Beijing to a city in south Hunan, the train was mostly empty most of the time). China builds mostly as a stimulus program, because if consumers aren't consuming its one of the only tools they have, but also focuses on flashy projects that they can brag about in articles like this. However, much of this infrastructure is going to be underutilized for decades, while really needed infrastructure, like adequate flooding drainage, doesn't provide enough "face" to be considered instead. So every year, we see pictures of flooded out cities...but at least you can get to them quickly on empty trains!
http://www.railjournal.com/index.php/high-speed/chinese-high...
>In 2013, Chinese high-speed traffic reached 214 billion passenger-km, slightly more traffic than the rest of the world's high-speed networks combined
>the CRC network is already one of the most densely used in the world, with robust growth between 2009 and 2013. Overall passenger traffic grew by 5.5% per year during this period reaching 2.1 billion passengers or 1060 billion passenger-km in 2013. Railfreight grew by 6% per year to 3.6 billion tonnes, or 2633 billion tonne-km in 2013. These are large volumes compared with the size of the network (103,100km in 2013).
> Although the railway authority has said that the Beijing- Shanghai high-speed railway was the only profitable high-speed rail in China in the past five years, some believe that other lines in densely-populated and developed regions will likely become profitable soon.
Only Beijing to Shanghai is making a profit ATM (flying is still cheaper on that route, but airport delays are way too bad).
They're still saving and those savings keep a lid on Chinese inflation which makes projects like this affordable.
>China desperately needs for its consumers to actually consume to move away from an export oriented economy, which is especially sensitive to trade friction.
There's a lot of talk in the CCP about shifting China's economy to becoming more consumer driven but there isn't a lot of appetite to actually do the things which would make that happen - namely some sort of social security/nationalized health insurance system.
The Chinese will thus continue to be terrified of getting old and sick and will and save accordingly, and those savings will no doubt continue to get recycled into projects like this as well as subsidizing state run SMEs with cheap loans.
2017 will be very interesting. Can't wait to see what happens in Tuesday.
They sure do and you only have to look at Australia, US, and Canada where it ends up. The Chinese keep most of their money in either cash or real estate. They don't trust banks.
Have you been to Beijing recently? I can assure you the Chinese worker is also buying a car. China has the highest automative sales of anywhere on the planet.
Here is some data:
https://www.bloomberg.com/news/articles/2016-12-08/china-wra...
http://www.chinadaily.com.cn/business/motoring/2016-01/26/co...
http://www.accessmagazine.org/articles/fall-2012/will-chinas...
Yes, and if you talk to most people, they can't dream of affording a car, let alone in Beijing. It's insanely expensive, not even including the permit[1]. Maybe if you're in Beijing talking to rich people or just looking at the traffic in abject horror, it looks like everyone is buying cars.
China, per capita, has like one fifth or one sixth as many cars as the US. There's like one car per 10 people.
[1] and by permit I don't mean the actual cost of getting a Beijing plate through normal channels (which has like a <0.2% chance of actually working due to the lottery). I mean if you actually want to guarantee that you get a car, be prepared to grease the wheels with lots of money. Shit idk how that even works with Xi Jinpings rampage against corruption, I don't think they've gotten that low of a level yet (still going after higher-ups).
If you want to get a permit in Beijing and have money, buy a Tesla. The quota for elctric vehicles is higher than for gas, so you see a lot of rich people in Teslas these days, something unthinkable only a couple of years ago.
Yes, it would be this :)
For example I can save 50% of my income but if i lend to a 90 year old who uses it to fund an elaborate funeral my savings means little.
Other metrics in China suggest that a lot of investment in China since 2008 hasn't been productive. This pattern isn't limited to China but is common in every country who has gone through rapid debt expansion including the US. Finding productive investments takes work and talent and economies have natural limits on investment opportunities that aren't purely monetary.
My relative worked at Crane Pumps for years; every order was a fix-on-failure emergency order. For pumps designs that went back 50 years - they were commonly pulling plans on paper out of drawers in storage rooms to match exactly the specs for some ancient pump in Pocatella or Poughkeepsie.
When Obama had that shovel-ready infrastructure effort, they expected a big upswing in business. But nope; nothing. Probably because water systems are underground and invisible. They wanted splashey visible activity like road-building. Which IMHO accomplished exactly the opposite of what was intended - they built MORE infrastructure to support.
That is awesome. Thank you for the info.
When a company like Crane Pumps goes out of business because cheaper imports take over its market, all that information (the paper plans from past pump designs) probably gets lost forever. Once the company folds, these small cities all over the country cannot replace their old pumps and instead have to upgrade the system to make it compatible with a new pump model.
I wonder if global trade economists account for that additional cost to the customers when the old domestic supplier goes away.
Drainage in the USA is also a magnitude better than in china. I'm sure hey could use upgrades, and I'm sure there is a bias to showy projects, but it is nothing compared to what happens in the guo.
in reality the bank will force you into bankruptcy, seize all your assets because they're at the top of the payback list, and blacklist you from ever running a business or borrowing money again.
in other words, you lose.
You'd be surprised. People have recovered from such "bankcrupcies" time and again, including the current POTUS.
It's not a cliche. It's reality. If you loan someone an insane amount of capital and are dependent on a return on that capital to keep your bank solvent, you are now dependent on them (e.g. "To Big to Fail") for your own business to not collapse. Interestingly enough, you can only extend credit to someone if you consider them an equal, at least at first. Removing this equality is how you can turn a person into property.
Debt and guilt are the same word in many languages (such as German) and debt has a large moral social construct attached to it (which is why people are hesitant to walk away from debt, even when the value of a house exceed what they'd pay on a load).
I highly recommend reading the book Debt the First 5,000 Years. It's the most comprehensive book I've read on the history of money, debt and slavery. They are all very closely related, and it will change the way you look at states, money and markets.
[citation needed]
I would be shocked if this doesn't improve the lives of the average Chinese citizen, and I think it likely that a long-term move towards public transportation will help China meet its carbon emissions goals.
- Make "friends."
- Countries now owe China money over 30+ years.
- Makes it easier for China to ship products into these countries helping China's economy.
Interstate highways barrelled their way though the hearts of cities, destroying poor/low-income neighbourhoods. If at any time US policy makers decide to push for rail, we could see dramatic turnarounds over the course of the next two decades.
Seattle is building ST3 and California is building its high speed network. It's a start, and we're still ahead of Australia when it comes to inter-city rail, but no where near close for urban/light rail (which every Australian state capitol has except Darwin and Hobart).
By comparison, Russia is less densely populated, yet they have a both better high speed rail and last-leg commuter rail between/in major cities and they are actively expanding their high speed systems.
Self driving cars are realistically a decade away and they cannot solve the capacity problem:
http://penguindreams.org/blog/self-driving-cars-will-not-sol...
..and they can only solve the last leg problem if we have better inter-city rail infrastructure.
https://www.fra.dot.gov/Page/P0362
The US has one of the best freight rail systems in the world. As a country we ship freight not people. Its not tragic, its damn amazing. I'm sorry they didn't specialize it for the use case you want.
http://thehill.com/policy/transportation/263782-obama-high-s...
"His stimulus offer was rebuffed by Republican governors in states including Ohio, Wisconsin and Florida, who rejected the money."
FTA:
I was addressing "against anything involving steel tracks."
https://en.wikipedia.org/wiki/Amtrak
I think the US officially has 26 miles of HSR. China transports 1.1 billion people a year on HSR. Amtrak carries about 30 million people a year. Why don't more people take Amtrak? It's faster to drive.
Steel tracks are doing just fine in the US, thank you very much, with minimal governmental involvement. Our rail system is the envy of the world, and has been getting new investment to the tune of $25 billion a year of late. This is why Berkshire Hathaway bought BNSF, so they could have a place to reinvest billions of dollars of profit and earn a return.
All freight rail, of course.
Mind you, regulatory creep threatens this. The FRA has been pushing for "safety" rules which are basically handouts to labor unions (requiring extra headcount per train), and Positive Train Control's top-down bureaucracy-driven technology-solutioning has been a comedy of errors, but the real threat they're facing is the potential of a mandate to make all freight trains make way for passenger trains. which no one will use.
If anything, the Trump administration will be much better for steel rails than the past eight years. Still freight rails, of course. But unlike theoretical passenger rail proposals, these ones are already popular and profitable and reducing carbon emissions.
https://www.amtrak.com/national-facts
Amtrak then overpays for this use which amounts to a government subsidy.
http://www.eenews.net/stories/1060015115
We subsidize rail (freight+passenger) just as we subsidize airlines. Let's just be honest about it.
BTW, your notion of the FRA over-regulating for unions is similarly malarkey. And envy of the world? Dunno if you've been to Europe (which is heavily regulated).
I live in Europe right now, thank you.
European (freight) rail falls apart the moment you cross any internal border: differences in train control systems, electrification standards, signalling systems, loading gauges, and the like. France, Spain, and Germany alone have four different electrification systems among them.
> We subsidize rail (freight+passenger) just as we subsidize airlines. Let's just be honest about it.
Sure. Is this actually a point of contention? It'd be great if we could stop, anyway, and let various forms of transportation compete on true merit rather than on which one the politicians prefer. Especially for freight. There are various barriers to this happening, naturally. It'd be great if they could be reduced and any externalities mitigated.
And the subsidies don't nearly approach the ~$25B/yr new investment.
> BTW, your notion of the FRA over-regulating for unions is similarly malarkey.
I refer you to 81 FR 13917, in which the agency itself admits in the filing, "FRA has no empirical evidence to suggest" that two-person crews are safer, admitting that "in fact, it is possible that one-person crews have contributed to the improving safety record".
That's just a tiny piece of what they get to deal with, anyway.
Then I don't know if you've lived in the US. I've lived and worked both places.
As for 81 FR 13917, you're mis-summarizing your source.
https://www.federalregister.gov/documents/2016/03/15/2016-05...
Indeed, the previous sentence was:
Maybe when Positive Train Control (which you refer to as a Comedy of Errors) is fully in place, you might be right and train crews could be reduced. Until then, you're essentially saying that 1 person crews are enough because Labor Unions. Calculate how much that labor is costing as a percentage of the train revenue and get back to me. I doubt Warren is looking that far past the decimal point.Basically, you sound anti-labor and anti-regulation. Just say it.
BTW, outside of Spain's Iberian gauge, I'm not aware of any inter-country freight problems.
Loading gauge, not track gauge. Here in Britain, Network Rail's standard W6a gauge is too small for standard shipping containers on standard cars. You need to get up to W8 for that, and W10 for High-Cube. They have that on certain corridors only. You can use special low-deck cars to get around it, of course, though those are heavier and more expensive to own and operate.
Meanwhile in the US, all that investment cash has made double-stacked container transport the norm rather than the exception. Do not expect to see it in Europe in either of our lifetimes.
FTA: Amtrak wasn't formally reviewing invoices, some of the alleged over-payments lack supporting documentation, and in general, it sounds like there's STILL disagreement over contract language.
If anything, the taxpayers subsidized management negligence.
The USA isn't the envy of the world for anything these days. Only Americans think that. Nobody envies you for anything, not even Silicon Valley, with the housing crisis and poverty surrounding it.
http://business.time.com/2012/07/09/us-freight-railroads/ - "US Freight Railroads are the Envy of the World"
But if you don't trust the Americans let's ask the Brits.
http://www.economist.com/node/16636101 (The Economist) - "America’s system of rail freight is the world’s best" and "They are universally recognized in the industry as the best in the world."
It's a fact generally acknowledged. I'd find you more variety but it's harder to get detailed Asian and European perspectives in English, you know?
That said, I sure hope no one envies Silicon Valley. An individual facet of it like the jobs or the climate, maybe...
As for the best of the best, I just kinda think Deutsche Bahn has us beat. And Japan. And Switzerland ...
“IEEFA forecasts that China will install an additional:
* 22GW of wind
* 18GW of solar
* 16GW of new hydro
* 6GW of nuclear.
Seriously, is a 2 day sleeper HSR from SF to new York with damn good internet really less productive meams of emloyee transport than trains? You spread out the pain of time zone shifts, avoid all the bullshit at airports, an and work much more effectively.
I think I rather take a train for any trip short of being intercontinental, and would be a more productive worker because of it.
Trump has an infrastructure plan, maybe he'll see that China and Europe has better trains and that would spur him to propose HSR (being cynical, but he can power it by coal since he wants to bring back coal to the US :) )
Seems sustainable.
This is just what fascists do.
High speed rail is the solution, not a pipe dream, the issue in the USA from what I've observed is that we don't fund it at the federal level.
There still seem to be deep misgivings within his cabinet about the spending, but Trump seems to tend to get what he wants, and is quick to fire people who aren't making it happen, so...
You're saying that it existed before and that it opposed infrastructure spending doubtfully out of heartfelt principle. Now that the Republican Party candidate has been elected, does this wing still exist? If it exists then surely it can be depended on to resist any large government infrastructure spending that a populist candidate would propose.
Surely this is the case.
There were clearly vast distances between the Pre-Trump Republican establishment, and the Republican electorate, and so it would make sense for the post-Trump Republican establishment to move in Trump's direction. That process is currently nascent, and the differences have, if reports are anything to go on, yet to have shaken out.
Because of the way Trump operates, and because of the populist shift of the Republican electorate, I'd expect Trump to win most of the internal battles on spending. The winds are at his back. He will probably also flip many Republicans who previously positioned themselves as staunch fiscal hawks.
If Colin Powell and Condoleezza Rice do something, that's OK. If Hillary does the same thing, it's treasonous. Got it?
it can only take you 90% of the way there. You still need other transit options.
Seattle is spending 54 billion dollars over the next 25 years for a mere 62 miles of light rail.