Hypothetical: China's Economy Collapses
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Hypothetical: China's Economy Collapses
So what would happen if China's economy collapsed? What sort of conditions would have to occur for that to happen? How would a collapse impact the US?
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Username17
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China's economy "collapsing" could mean an awful lot of different things. While it could indeed have some sort of Zimbabwe situation where mismanagement of the central authorities combined with rampant corruption and a tremendous amount of external pressure from ill-will abroad results in virtual trade isolation, complete cessation of industry and agriculture, and an evaporation of the currency - that really isn't likely. If that did happen, it would be the worst humanitarian crisis in human history, as roughly 1.3 billion people began enthusiastically starving to death while sitting on the fourth largest collection of weaponry on the planet.
What is more likely is a massive misfit between what their economy produces and what they need. Say, the rest of the world decides to stop putting up with their currency manipulation bullshit and starts running tariffs on their shit. Or they get some good old fashioned oil shocks and can no longer ship goods to the far corners of the world. Either way, their economy could suddenly turn up with a lot of unemployment. And remember that unemployment is no joke in China. They have little in the way of a safety net and every 1% of unemployment is 13 million people. China could end up with 30 to 60 million starving rebels next month, and the PLA has shown that not all of them are even willing to attack Chinese dissidents.
Basically you are way more likely to see a political collapse with economic triggers than you are to see a total economic collapse. And a political collapse of China is liable to be a lot like the collapse of the Soviet Union. Except you know, four times as large. So expect to see some relatively nice countries showing up and a bunch of shitholes. I predict that Hunan will be one of the shitholes. Expect to be making Hunan jokes every bit as funny as Moldova jokes about ten years after China breaks up.
Oh, and you'll see healthcare standards drop across the continent. Expect the life expectancy in former Chinese republics to be 10 years less than it was in China for some time.
Why?
-Username17
What is more likely is a massive misfit between what their economy produces and what they need. Say, the rest of the world decides to stop putting up with their currency manipulation bullshit and starts running tariffs on their shit. Or they get some good old fashioned oil shocks and can no longer ship goods to the far corners of the world. Either way, their economy could suddenly turn up with a lot of unemployment. And remember that unemployment is no joke in China. They have little in the way of a safety net and every 1% of unemployment is 13 million people. China could end up with 30 to 60 million starving rebels next month, and the PLA has shown that not all of them are even willing to attack Chinese dissidents.
Basically you are way more likely to see a political collapse with economic triggers than you are to see a total economic collapse. And a political collapse of China is liable to be a lot like the collapse of the Soviet Union. Except you know, four times as large. So expect to see some relatively nice countries showing up and a bunch of shitholes. I predict that Hunan will be one of the shitholes. Expect to be making Hunan jokes every bit as funny as Moldova jokes about ten years after China breaks up.
Oh, and you'll see healthcare standards drop across the continent. Expect the life expectancy in former Chinese republics to be 10 years less than it was in China for some time.
Why?
-Username17
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JonSetanta
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The Adventurer's Almanac wrote: ↑Fri Oct 01, 2021 10:25 pmNobody gives a flying fuck about Tordek and Regdar.
I'll ask Ess to send me the link when he's around...
He found some story about things that are happening in China that hinted at some sort of economic failure. It was acknowledgedly written with some horrible biases, but I was wondering how much truth might be in it. And, I was also wondering what the impact would be on those countries that trade with China.
He found some story about things that are happening in China that hinted at some sort of economic failure. It was acknowledgedly written with some horrible biases, but I was wondering how much truth might be in it. And, I was also wondering what the impact would be on those countries that trade with China.
My son makes me laugh. Maybe he'll make you laugh, too.
I keep saying, jokingly, for I don't know the actual political and societal consequences of the idea, that we (the US) should invade and conquer China as a fix for our economic troubles. War has, in the past, stimulated our economy, if we wiped them out, there goes a huge chunk of our debt, we suddenly control a lot of the manufacturing in the world...
I love the idea, I really do, but it will always be a joke, because I have no clue what it'd actually do...
I love the idea, I really do, but it will always be a joke, because I have no clue what it'd actually do...
Cuz apparently I gotta break this down for you dense motherfuckers- I'm trans feminine nonbinary. My pronouns are they/them.
Winnah wrote:No, No. 'Prak' is actually a Thri Kreen impersonating a human and roleplaying himself as a D&D character. All hail our hidden insect overlords.
FrankTrollman wrote:In Soviet Russia, cosmic horror is the default state.
You should gain sanity for finding out that the problems of a region are because there are fucking monsters there.
It would probably be one of those wars where people kind of sit around and wonder what to do because both sides have immense superiority in their territory. Well, actually the US has immense naval superiority, but it's kind of the same thing.
DSMatticus wrote:It's not just that everything you say is stupid, but that they are Gordian knots of stupid that leave me completely bewildered as to where to even begin. After hearing you speak Alexander the Great would stab you and triumphantly declare the puzzle solved.
My ex-military poli sci teacher says it's a terrible idea and that we'd lose. I know nothing about that one way or another. Granted, we could just nuke them and yell surprise, but that negates the whole "control most of the world's manufacturing" part...
Cuz apparently I gotta break this down for you dense motherfuckers- I'm trans feminine nonbinary. My pronouns are they/them.
Winnah wrote:No, No. 'Prak' is actually a Thri Kreen impersonating a human and roleplaying himself as a D&D character. All hail our hidden insect overlords.
FrankTrollman wrote:In Soviet Russia, cosmic horror is the default state.
You should gain sanity for finding out that the problems of a region are because there are fucking monsters there.
China is currently sitting on a massive real estate bubble of their own. Speculators and urbanization have combined to create overinflated values for real estate, with all the attendant problems the US demonstrated recently. However, their banking sector is obviously different with the fallout likely to be less dramatic.
Emphasis on "likely". So, that would be the main impetus of a Chinese economic collapse in the short term.
The fallout would likely be good for the rest of the world, based on my incomplete and imperfect understanding. They're net exporters (meaning they crowd out everyone else) and net savers (meaning that they don't buy other people's shit) and yet still massive consumers of raw materials (driving up commodity prices).
Emphasis on "likely". So, that would be the main impetus of a Chinese economic collapse in the short term.
The fallout would likely be good for the rest of the world, based on my incomplete and imperfect understanding. They're net exporters (meaning they crowd out everyone else) and net savers (meaning that they don't buy other people's shit) and yet still massive consumers of raw materials (driving up commodity prices).
The precursor to China's economic collapse would the US economic collapse. They hold too many US dollars in reserve, as long as those dollars have value, they're in pretty good shape. The US collapse is a bit more of a concern to me, at least.
Much of China is still barely past Medieval (some of their WW2 era troops were still using pikes and flintlocks, and Communism isn't real good at raising the general technological standards. Somewhere online you can find a picture of China by night, and you'll note it's mostly black since much of the country doesn't have lights, unlike the US)...basically every mile you go away from the coast or a regional capital is like 1 year back in time. I took a trip outside of Beijing, and 60 miles out, running water and electricity were no longer givens, for example.
So, their economic collapse won't be that disastrous, at least compared to Communism in general. Probably more like our Great Depression, since most of the country doesn't have that far to fall. Things will be real bad in the cities, and I would imagine there would be flight from the cities back to the farms, perhaps.
The collapse won't directly matter to the US, because we'll already be dealing with the problems of our own collapse. They won't be making as many cheap electronics and stuff...but we'd be in no position to buy such things even if they had them.
And, absolutely positively fundamentally the US can't win a ground war with China, despite our technological advantages. Well, I guess it depends on the definition of 'win'...are we really winning in Iraq and Afghanistan?
Much of China is still barely past Medieval (some of their WW2 era troops were still using pikes and flintlocks, and Communism isn't real good at raising the general technological standards. Somewhere online you can find a picture of China by night, and you'll note it's mostly black since much of the country doesn't have lights, unlike the US)...basically every mile you go away from the coast or a regional capital is like 1 year back in time. I took a trip outside of Beijing, and 60 miles out, running water and electricity were no longer givens, for example.
So, their economic collapse won't be that disastrous, at least compared to Communism in general. Probably more like our Great Depression, since most of the country doesn't have that far to fall. Things will be real bad in the cities, and I would imagine there would be flight from the cities back to the farms, perhaps.
The collapse won't directly matter to the US, because we'll already be dealing with the problems of our own collapse. They won't be making as many cheap electronics and stuff...but we'd be in no position to buy such things even if they had them.
And, absolutely positively fundamentally the US can't win a ground war with China, despite our technological advantages. Well, I guess it depends on the definition of 'win'...are we really winning in Iraq and Afghanistan?
Last edited by Doom on Sun Nov 28, 2010 7:05 am, edited 1 time in total.
Yeah, hey, they launched Sputnik! Then never went to the moon or managed a decent way to travel cross-country, but... yeah! Sputnik!
Of course, communism also failed to do shit for rural China in the past five decades (who plan on having full electricity for rural areas by 2015) or Vietnam or Cuba or or or.
I know folks have a hardon for communism, and Starmaker likes to root for the good 'ol days, but seriously. Vietnam shit the bed when the communists took over. Cuba shit the bed when communists took over. Russia managed to pretend it was a serious country for a while, but that's over. Communism doesn't do shit well other than organize the downtrodden and empower them to affect change and steal some rights and privileges back from their economic masters... but once they run the show they're pretty comical.
Of course, communism also failed to do shit for rural China in the past five decades (who plan on having full electricity for rural areas by 2015) or Vietnam or Cuba or or or.
I know folks have a hardon for communism, and Starmaker likes to root for the good 'ol days, but seriously. Vietnam shit the bed when the communists took over. Cuba shit the bed when communists took over. Russia managed to pretend it was a serious country for a while, but that's over. Communism doesn't do shit well other than organize the downtrodden and empower them to affect change and steal some rights and privileges back from their economic masters... but once they run the show they're pretty comical.
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Username17
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Huh?Doom wrote:The precursor to China's economic collapse would the US economic collapse. They hold too many US dollars in reserve, as long as those dollars have value, they're in pretty good shape.
China's total reserves, not just in dollars but in all forms of foreign currency, is about $2.4 trillion. That's a lot of money. That's almost $2 thousand per person in their country. Their real GDP is about $9 trillion. Those foreign currency reserves could cover them for about 3 months in the absence of a respected Yuan.
China's foreign currency reserves are impressive and shit, but they can't actually keep the country afloat.
-Username17
Oh, c'mon, now, even in a collapse the economy doesn't go to absolute 0. The US lost about 35%, numbers vary, of its economy over the first four years of the Great Depression....not 100% every year.
Let's go with your numbers so far, though, $2000 per person.
China's estimated per capita income in 2009 was $3700, so now we're talking 6 months of complete coverage of the population, without even going a nickel into debt, under the assumption all production drops to absolute zero (so 100% unemployment, much worse than the 25% of the Great Depression). Yeah, that's still bad, but it's also unrealistic. Still, if they had a big paying customer, 6 months would be enough time to get quite a number of factories completely rebuilt (presumably, GDP dropped to 0 because all their production capacity was disintegrated by a pissed off wizard or something).
Under a more realistic assumption of a 10% yearly decrease in economic activity over 4 years (comparable to the Great Depression, and China really doesn't have nearly so far to fall), the US reserves alone would be almost sufficient to handle things for their people, without even touching the savings of the general population (plenty left over if they do any belt-tightening at all, which, realistically, they would), and without going into debt. Throw in the rest of their reserves, and they're good for a decade if it's as bad as our Great Depression. Throw in deficit spending, even a tiny fraction compared to US deficit spending, and they're good for a generation....of course they'll be screwed like we are now after that generation, but we're back into totally unrealistic territory again. The US contracted during the Great Depression for 4 years, taking another 6 to get back to where it was in 1929.
The point is still pretty minor, however, as long as the US is here to buy all the stuff they're making, they can't have a severe collapse. We have to go down first, at which point we won't really have time/resources to deal with whatever problems they'll have.
So, to answer Maj's OP:
1) Six months or so where the world can't get cheap goods while China rebuilds. After a year or two, back to business as usual.
2) The US needs to collapse first.
3) Moot point, we'll be thoroughly screwed already, making their collapse irrelevant.
Let's go with your numbers so far, though, $2000 per person.
China's estimated per capita income in 2009 was $3700, so now we're talking 6 months of complete coverage of the population, without even going a nickel into debt, under the assumption all production drops to absolute zero (so 100% unemployment, much worse than the 25% of the Great Depression). Yeah, that's still bad, but it's also unrealistic. Still, if they had a big paying customer, 6 months would be enough time to get quite a number of factories completely rebuilt (presumably, GDP dropped to 0 because all their production capacity was disintegrated by a pissed off wizard or something).
Under a more realistic assumption of a 10% yearly decrease in economic activity over 4 years (comparable to the Great Depression, and China really doesn't have nearly so far to fall), the US reserves alone would be almost sufficient to handle things for their people, without even touching the savings of the general population (plenty left over if they do any belt-tightening at all, which, realistically, they would), and without going into debt. Throw in the rest of their reserves, and they're good for a decade if it's as bad as our Great Depression. Throw in deficit spending, even a tiny fraction compared to US deficit spending, and they're good for a generation....of course they'll be screwed like we are now after that generation, but we're back into totally unrealistic territory again. The US contracted during the Great Depression for 4 years, taking another 6 to get back to where it was in 1929.
The point is still pretty minor, however, as long as the US is here to buy all the stuff they're making, they can't have a severe collapse. We have to go down first, at which point we won't really have time/resources to deal with whatever problems they'll have.
So, to answer Maj's OP:
1) Six months or so where the world can't get cheap goods while China rebuilds. After a year or two, back to business as usual.
2) The US needs to collapse first.
3) Moot point, we'll be thoroughly screwed already, making their collapse irrelevant.
Last edited by Doom on Sun Nov 28, 2010 5:38 pm, edited 2 times in total.
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Username17
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Where do your numbers come from? Wikipedia says $6,567Doom wrote:China's estimated per capita income in 2009 was $3700, so now we're talking 6 months of complete coverage of the population
That's a pretty damn big difference, and I can't really talk numeric specifics until we get these sorts of discrepancies ironed out.
-Username17
Speaking as a citizen of a country whose economy is dependent on selling commodities, a large fall in commodity prices would be very bad. There's a fair few other countries which would be in the same boat, too.mean_liar wrote:The fallout would likely be good for the rest of the world, based on my incomplete and imperfect understanding. They're net exporters (meaning they crowd out everyone else) and net savers (meaning that they don't buy other people's shit) and yet still massive consumers of raw materials (driving up commodity prices).
Weird, thought I looked it up on Wiki myself....sorry, must have slipped into an alternate universe or something.
Found a site with 5k (http://www.success-and-culture.net/arti ... come.shtml), and here's a site with $865 per person for gross national income (http://www.nationmaster.com/graph/eco_g ... per-capita), along with a place or two that give in the area of 6k.
Another site mentions how calculations can vary quite a bit, stating China goes from 5k to 1.1k (http://www.success-and-culture.net/arti ... come.shtml, 2003 figures, but still), and mentions why Luxembourg comes out so high in rankings.
Finally freakin' found it: http://en.wikipedia.org/wiki/List_of_co ... per_capita
Totally my bad, was quoting GDP per capita, as per your initial post. So, things do work there.
But let's go with $6700 as actual income (and that's being really generous, most of China is poor in ways most American readers can't imagine), assume Depression-style reductions in income comparable to reductions in GDP, and let's just assume the government writes checks to make up any loss of income. Now they'd need all their reserves, and perhaps a bit of deficit spending (still nothing like the US now) for their entire population to not even notice if China had a Great Depression comparable to the US, at least for the first four years. If they only write checks to folks earning less than $6700 a year, they could probably go for many decades, even though that covers 95% of the population.
This really goes to show how China really isn't in a position to collapse, at least not before the currencies their reserves are based upon devalue dramatically.
Found a site with 5k (http://www.success-and-culture.net/arti ... come.shtml), and here's a site with $865 per person for gross national income (http://www.nationmaster.com/graph/eco_g ... per-capita), along with a place or two that give in the area of 6k.
Another site mentions how calculations can vary quite a bit, stating China goes from 5k to 1.1k (http://www.success-and-culture.net/arti ... come.shtml, 2003 figures, but still), and mentions why Luxembourg comes out so high in rankings.
Finally freakin' found it: http://en.wikipedia.org/wiki/List_of_co ... per_capita
Totally my bad, was quoting GDP per capita, as per your initial post. So, things do work there.
But let's go with $6700 as actual income (and that's being really generous, most of China is poor in ways most American readers can't imagine), assume Depression-style reductions in income comparable to reductions in GDP, and let's just assume the government writes checks to make up any loss of income. Now they'd need all their reserves, and perhaps a bit of deficit spending (still nothing like the US now) for their entire population to not even notice if China had a Great Depression comparable to the US, at least for the first four years. If they only write checks to folks earning less than $6700 a year, they could probably go for many decades, even though that covers 95% of the population.
This really goes to show how China really isn't in a position to collapse, at least not before the currencies their reserves are based upon devalue dramatically.
Last edited by Doom on Sun Nov 28, 2010 10:44 pm, edited 2 times in total.
I find it a fairly likely outcome, myself, which is why I find it tough to consider the implications of China's economic collapse...roughly on the same level of worrying about how bad my peripheral nueropathy will be after getting decapitated.
Last edited by Doom on Mon Nov 29, 2010 4:03 am, edited 1 time in total.
Well, it will only work if the US puts an import tarriff on chinese goods, which would be fucking hilarious. Otherwise the Yuan - dollar peg will prevent sustained devaluation.
However, it remains that a devaluation of 40% over 2-3 years would help the US like.. a lot. It would also fuck china right in the ass.
However, it remains that a devaluation of 40% over 2-3 years would help the US like.. a lot. It would also fuck china right in the ass.
Last edited by cthulhu on Mon Nov 29, 2010 8:53 am, edited 3 times in total.
So why is the Ben Ber-nank trying to fight devaluation with QE2?
My son makes me laugh. Maybe he'll make you laugh, too.
I doubt QE2 is actually going to fight devaluation, but whatever.Maj wrote:So why is the Ben Ber-nank trying to fight devaluation with QE2?
The problem is it only works if you can devaluate compared to your major trading partners.. but they are devaluing as well (the UK), devaluing because they are shackled to non performers (germany), or have an explict US dollar peg (china).
China is the biggest issue, but this is the problem at hand - actually devaluing the US dollar compare the Yuan requires trade sanctions to end chinese currency manipulation.