China - Geostrategic & Geopolitical.

[seaspear]

Its very hard sometimes to get reliable statistics on command control countries even statistics released by this Chinese source do not predict high growth
China: GDP growth rate 2027 | Statista
Nomura cuts China’s GDP growth forecasts for 2022 and 2023 (fxstreet.com)
The OECD has also long term statistics for China that can appear positive if nothing goes wrong ,but as we know things can go wrong anywhere
China GDP Growth Forecast 2019-2024 and up to 2060, Data and Charts - knoema.com

 

[koxinga]

I am not an economist and don't pretend to be one.. but population numbers is just one dimension of economic strength, no?

It would depend on their level of maturity of their economic development. I mean, Japan remains a G7 leader despite their falling/aging population while you have countries like India, with large young populations but for a variety of structual reasons unable to catch-up to China. I see China running into the same problems as maturing economies and making structural changes from more labour intensive to value added. Their export led growth would also change since the middle class would have purchasing power.

On the ground / personal level, I don't see big movements in terms of decoupling and China remains a significant consumer market for foreign brands.

 

[Ananda]

Goldman Sachs in this month (as link in my previous post) just ugrade their projection at 5.5% this year. Most market and economist prediction range vary from pessimistic 4% to more optimistic 6%. Even Chinese serious sources (not 50 cents wumao) agree that China will not be back to the range of 8%-9% that they used to have this last three decades.

Making long term projections depends on many assumptions. That's what economist and market analyst done when making projections. Put base assumption that can be more or less predictable in long term. Thus it is always going to have varied results, as their models base on their each understanding for predictive factors assessment.

Still the various models from various analysts and economists avarage prediction, put Chinese growth around double then average OECD long term growth. Something that shown even with their predictive slow downs and problems, they are still stay as big global economics powerhouse.

population numbers is just one dimension of economic strength, no?

It is one of factors that being used to predict one economy future productivity trend and market take out. However there're always other factors that influence productivity multipliers. Including factors of quality of your population versus quantity of your population.

large young populations but for a variety of structual reasons unable to catch-up to China.

Which is why infrastructure availabilities also become big parts on productivity multipliers. Including in that is production value chains ecosystem that none of other emerging markets have reach China level yet.

 

[Musashi_kenshin]

I am not an economist and don't pretend to be one.. but population numbers is just one dimension of economic strength, no?

Yes, but in China's case the configuration of their population is also important. A sudden and significant drop in workers will have a negative effect on the economy, and this is exactly what is going to happen. The CCP could suddenly raise the retirement age to 65, but that would be extremely unpopular and would risk renewed unrest.

It would depend on their level of maturity of their economic development. I mean, Japan remains a G7 leader despite their falling/aging population

We know that China's economy is nowhere as developed as Japan's, and their population is ageing more rapidly than any other in the history of humanity according to Peter Zeihan. This is coupled with a very low retirement age and poor social/health spending.

Dealing with the costs of the ageing population will put stress on the Chinese budget where currently there isn't capacity for big increases in social/health spending. Cashing in overseas bonds would be kicking the can down the road. What will the CCP do, raise taxes on an ever shrinking workforce or tell older Chinese (who are often very stubborn) they'll only get token pensions? Even if healthcare spending doesn't increase quickly, an ageing population means more people going to hospital - there aren't even enough critical care beds now.

If you watch Peter Zeihan's video, it's clear he's not talking about national collapse (such an event is very rare). Rather the inevitable changes are going to be unpleasant. In my view, China may end up looking more like North Korea with a state that is more openly abusive towards its people. The economy may also become more divided, with "loyal" citizens given preferential access to resources in the cities and everyone else made to live with the permanent threat of starvation.

On the ground / personal level, I don't see big movements in terms of decoupling and China remains a significant consumer market for foreign brands.

There's nothing wrong with selling goods to China that they can buy, but assuming it will be a forever growth market as some companies think is very foolish.

Also if China does become even more repressive as I've suggested above, multinationals may find themselves under pressure they can't ignore to move their factories.

 

[koxinga]

I think we are reading tea leaves on a complex issue that would be decades in the making (probably a post XJP world, 30 years from now) and opinions can range from "the whole shebang is going down" to "everything's going to be fine"

Re the steep drop, I have some doubts. If I look at China's population pyramid today, the steep drop effect will happen decades from now.

Re stress on China's healthcare budget, if we look at them today, then yes, that will be an major issue. But then again, it is unrealistic to gauge them based on today's numbers. Likewise, is it fair to compare critical beds now when we are talking about a future event?

Re selling goods to China, I agree, but for slightly different reasons. Not because China becoming repressive and therefore foreign brands can't sell. But a combination of facts such as changing consumer preference to domestic brands, cost reasons. I have seen signs of that happening, especially with the recent e-comm sales events from Alibaba etc. Heck even competition could be a reason (e.g Shein taking on western (H&Ms) /japanese (Uniqlo/Zozos) fast fashion labels)

This issue of aging population is significant but at the same time, I haven't see any mature economies (Europe, Japan, US) really crash. They go into stagflation yes, and slow growth but maintain their lead positions.

Population Pyramids of the World from 1950 to 2100

China - 2023

www.populationpyramid.net

https://images.populationpyramid.net/capture/?selector=%23pyramid-share-container&url=https%3A%2F%2Fwww.populationpyramid.net/china/%3Fshare%3Dtrue

 

[seaspear]

The Wall street Journal believes in this article that Chinas ageing population will eventually with the slowing of productivity growth impact its economy,, challenges include downturns in the housing market and high unemployment for younger workers
China’s Shrinking Population Is Deeper Problem Than Slow Growth for Its Economy - WSJ

 

[Ananda]

US defense industry unprepared for a China fight, says report

"War between major powers is likely to be a protracted, industrial-style conflict that needs a robust defense industry."

www.defensenews.com

This is base on the support that US give to Ukraine. Even some still debate weather what is the nature of Ukraine War in term of Western involvement, it is already a proxy war between West and Russia. Especially on armaments supply sides.

Thus this War already shown the limit that US (and West) can supply perpetual peer to peer war with another large military power. Still as this article put even CSIS study doubt US abilities to support Taiwan supplies, if China decided to move in agaist Taiwan.

This base on current inventories and supplies support available within present US MIC capacity at this moment. For me this is going to raises questions on how far tax payers will going to agree on supporting more production orders. In the end MIC are businesses that Tax payers have to agree on giving more investment to support increasing their capacities.

 

[Vivendi]

US defense industry unprepared for a China fight, says report

"War between major powers is likely to be a protracted, industrial-style conflict that needs a robust defense industry."

www.defensenews.com

This is base on the support that US give to Ukraine. Even some still debate weather what is the nature of Ukraine War in term of Western involvement, it is already a proxy war between West and Russia. Especially on armaments supply sides.

Thus this War already shown the limit that US (and West) can supply perpetual peer to peer war with another large military power. Still as this article put even CSIS study doubt US abilities to support Taiwan supplies, if China decided to move in agaist Taiwan.

This base on current inventories and supplies support available within present US MIC capacity at this moment. For me this is going to raises questions on how far tax payers will going to agree on supporting more production orders. In the end MIC are businesses that Tax payers have to agree on giving more investment to support increasing their capacities.

Analysts have also in the past pointed out weaknesses of the US industrial base, so not really something new. What is new is of course that what was described by analysts in more "theoretical" terms is now for all to see due to the war in Ukraine. The US has already started focusing more on addressing these shortcomings. It will take time but the work has started and I think we will se it intensify.

The US also has something important that China is lacking: A large number of allies that will assist and support the US in various ways. Regional allies SK, Japan in particular both have significant industrial capacity. Allies in Europe have currently rather weak MIC however that is about to change as well, due to the war in Ukraine.

 

[Ananda]

The US has already started focusing more on addressing these shortcomings. It will take time but the work has started and I think we will se it intensify.

I'm not US tax payer and I believe you are not also. This depends on level of Investment that more than being given so far. Increasing any MIC capacities, means they need more Investment. This means assurance from US to take their output.

All this back whether US tax payers willing to put more money on that. Since both of us not US tax payers, then we can't say for sure how far they are willing to go. It is their wallet, not yours and not mine. So neither both of us can be sure how far is US tax payers thus US Politics will move on this.

A large number of allies that will assist and support the US in various ways

Really ? Do you really believe that they already give enough investment on par with US on MIC capabilities ? Talking and actually delivering is different things.

 

[Vivendi]

Really ? Do you really believe that they already give enough investment on par with US on MIC capabilities ? Talking and actually delivering is different things.

Why do "they" have to "give enough investment on par with US"? Also, you have to look at the sum of what all the allies of the US can provide...

SK already has a quite strong industrial base. Japan is currently expanding rapidly Japan unveils record budget in boost to military spending
Australia is also expanding it's budget. Labor reveals new defence budget - Australian Defence Magazine

The situation in Europe is a bit more complex, however, you will see that Europe will also start to expand albeit at a slower pace. Poland is leading with a massive investment in capabilities: Poland unveils record 2023 defence budget

France: Macron boosts French military spending by over a third to 'transform' army

Sweden: Sweden to increase military budget 64 percent by 2028

Finland: Finland to raise Defense budget 2023 to 2.25 percent of its GDP | Defense News September 2022 Global Security army industry | Defense Security global news industry army year 2022 | Archive News year

Netherlands: Additional EUR 5 billion in defence spending on a structural basis

UK: British defence spending to rise by more than 1 billion pounds, the Telegraph reports

 

[Ananda]

they" have to "give enough investment on par with US"? Also, you have to look at the sum of what all the allies of the US can provide...

You talk on the sum of they can provide ? Are you real ? The sum of they can provide is related to amount of Investment they willing to sunk in. Off course it is related. Like it or not Trump is right on that.

Look on what they (Euro zone) can give now on Ukraine war. Most of that is basically emptying what ex Warsaw Pact inventories left. How they expect to help US in Asia ? Even now some of the ammo being sources from ROK. The moments China invade Taiwan in near future, they (US Asian allies) will want to keep it for themselves. So who's US can turn to ? Euro Zone ? Same Euro zone that's now struggling to support US on Ukraine ? Let alone support US on Taiwan.

The articles talk about "if" China invade Taiwan in near future. Something that US can't do much to supply Taiwan, considering they also already need to support Ukrainian.

Your link on Euro zone increase the budgets still just talk, and not related to their MIC production rate. Because they are already neglecting investments on their MIC capacities for long time. So don't talk about their (euro zone) production capabilities if they are not willing to match US investments. Like I said, talking is one thing, delivering is another.

 

[Toptob]

To be fair, the defense industry was often pointed to as a shining exception of a generally weak and/or declining US industrial base. But the level of production is tailored to sustainment minus a little meat every year for the shareholders. And if this is left to go on unchecked you end up in a situation where you even find yourself falling behind on important matters like maintenance. In my humble opinion though I think the US invest far more than enough into it's defense, but they've created a situation where they're getting terrible returns on those investments!

Don't get me wrong, the US military is mighty and imposing, but if we take into account this is a seven hundred plus billion dollar a year military... I think US taxpayers wouldn't be wrong to expect a bit more for their hard earned dollars. Where I think countries like China but also South Korea and even France do a lot better is that defense is positioned as a communal affair that is existential to the functioning of the state. Whereas in the US far to often the process of defense falls prey to vested interests and political rent-seeking.

I think it's better to keep important parts of industry in your own hands. defense is a government affair and any sales outside of that will have to go through government as well, so there's no reason for a lot of these things to be a private undertaking. What's more is that often the needs of defense make it so that these things are beyond the logic of a "free market". Defense doesn't make economic sense, and it doesn't have to because it underlies everything that makes the economy possible.

But what's maybe much more important is that the current situation has showed us things that have big consequences. For example how advanced portable missile systems are very effective but need a wider distribution than we may have assumed. So maybe atgm's and manpads are platoon or even squad level weapons in stead of company or battalion level weapons and we need a lot more than we thought. And maybe we need a lot more artillery than we previously assumed and that's not even to speak of drones and how those are being used.

 

[swerve]

You talk on the sum of they can provide ? Are you real ? The sum of they can provide is related to amount of Investment they willing to sunk in. Off course it is related. Like it or not Trump is right on that.

Look on what they (Euro zone) can give now on Ukraine war. Most of that is basically emptying what ex Warsaw Pact inventories left. How they expect to help US in Asia ? Even now some of the ammo being sources from ROK. The moments China invade Taiwan in near future, they (US Asian allies) will want to keep it for themselves. So who's US can turn to ? Euro Zone ? Same Euro zone that's now struggling to support US on Ukraine ? Let alone support US on Taiwan.
...

European countries are giving much more financial & economic aid than the USA. They're keeping Ukraine's economy functioning & able to support the population. Without that the country might collapse.

Don't count only bilateral aid, which is what's usually reported. EU countries are giving much of their aid via the EU, rather than directly. Germany, for example, gives significantly more aid via the EU than directly. Overall, it gives more aid as a percentage of GDP than the USA does. So do a lot of other European countries. Most of the aid going via the EU is financial & economic, but some of it's military.

European & US aid is complementary, to some degree: the USA's giving more weapons & Europe's giving more money. And the Euro zone isn't all the EU, let alone all of Europe.

European manufacturers are increasing production of ammunition & the like fast. The UK, Norway, Czechia, Slovakia, Germany, etc. - all increasing production. That takes time, of course, but some of that new production has been delivered & it's continuing to be delivered - & that will increase. Ammo from other sources is a gap filler, a temporary measure while domestic production increases.

 

[John Fedup]

To be fair, the defense industry was often pointed to as a shining exception of a generally weak and/or declining US industrial base. But the level of production is tailored to sustainment minus a little meat every year for the shareholders. And if this is left to go on unchecked you end up in a situation where you even find yourself falling behind on important matters like maintenance. In my humble opinion though I think the US invest far more than enough into it's defense, but they've created a situation where they're getting terrible returns on those investments!

Don't get me wrong, the US military is mighty and imposing, but if we take into account this is a seven hundred plus billion dollar a year military... I think US taxpayers wouldn't be wrong to expect a bit more for their hard earned dollars. Where I think countries like China but also South Korea and even France do a lot better is that defense is positioned as a communal affair that is existential to the functioning of the state. Whereas in the US far to often the process of defense falls prey to vested interests and political rent-seeking.

I think it's better to keep important parts of industry in your own hands. defense is a government affair and any sales outside of that will have to go through government as well, so there's no reason for a lot of these things to be a private undertaking. What's more is that often the needs of defense make it so that these things are beyond the logic of a "free market". Defense doesn't make economic sense, and it doesn't have to because it underlies everything that makes the economy possible.

But what's maybe much more important is that the current situation has showed us things that have big consequences. For example how advanced portable missile systems are very effective but need a wider distribution than we may have assumed. So maybe atgm's and manpads are platoon or even squad level weapons in stead of company or battalion level weapons and we need a lot more than we thought. And maybe we need a lot more artillery than we previously assumed and that's not even to speak of drones and how those are being used.

US pork barrel politics absolutely reduces the value for money wrt defence procurement. Probably more money directed to basic kit inventory versus limited volume exotic kit would be useful.

 

[Ananda]

European countries are giving much more financial & economic aid than the USA. They're keeping Ukraine's economy functioning & able to support the population. Without that the country might collapse.

The question that the article talk from CSIS study is the abilities of US MIC capacities to support Taiwan in case Chinese invasions. This related with US difficulties to replenish their inventories after supplies materials for Ukraine war being spent.

So it is not about Euro Zone give more money to support Ukraine economy. The arguments on a member here of US will be supported by other allies on the case of difficulties to support defense materials is what I argue back. Even in Ukraine war assides giving up ex Warsaw Pact inventories, Euro zone can't keep up with US armament supplies. How they can support if US have to support Taiwan? Realistically US can't except much from Euro Zone allies in case of Taiwan. The only allies that can be expected is ROK and Japan. However if China invade Taiwan, there will be question if both of them will keep supplies for themselves or support Taiwan. Thus US has to relies on their own supplies more likely.

European manufacturers are increasing production of ammunition & the like fast. The UK, Norway, Czechia, Slovakia, Germany, etc. - all increasing production.

Well let's see how that translate to real production capabilities and capacities. At this moments most relies on Czech and Slovacks on anmos. Not the richer members in Western Euro zone. Still again this is about Taiwan support. How Euro zone can help US in case of Taiwan, if they have difficulties to keep up their arms supplies with US effort on a war in their door step ? This's why real investment in their MIC on par with current US Investment is matter. Let alone increase US investments as CSIS studies inclined too.

A Par in here means a par in the portion of their economies toward defense thus support their own MIC investments is part of it. That's why I said, like it or not, Trump is right on that matter.

it's better to keep important parts of industry in your own hands. defense is a government affair and any sales outside of that will have to go through government as well, so there's no reason for a lot of these things to be a private undertaking

Agree, on that. That's why the arguments on US can relies on the 'allies' on supporting Taiwan is no go under current conditions. This as US 'allies' especially in Euro Zone has not invest much on their MIC capacities, which for this last two decades already shown constant decline in capacities. They have to invest more, and invest on par with what US invest as the portion of their own economics (at least). At this current rate, their own MIC can not cover their own need in case of emergencies in their own door step, let alone support US on Taiwan on other part of the world.

As for whether US defense investments already efficient enough on Dollar to Dollar values on giving comparable return, I do agree with you and John 'pork barrel' connotations. Still how far you want to invests to support your own MIC is matter. Which none of US allies already even invest (as portion of their own economies) as much as US invests on their MIC production chain ecosystems. So even with some questionable return on investments that US spends, it is still can not be catch up with any of its allies including those in Euro zone.

This is why on this topic of Taiwan support, US more likely has to relies on their own. Which on that CSIS studies, even under present already huge capacities will not be enough.

 

[koxinga]

A conflict with China and the stress it brings to the munitions supply chain will quite different compared to Ukraine. The war on the European conflict is largely a land based conflict, with artillery, artillery rockets, various small arms munitions taking the center stage.

Given the vast distances of the Pacific, any potential conflict with the likes of China will see naval and airpower being more important and it would center around trying to interdict forces at stand-off distances. Nammo, Nexter Munitions, various East european factories (JSC Arsenal) increasing their 155mm will be inconsequential to the Pacific or Taiwan.

Considering this point, I am skeptical on the level of impact that European MICs can make to such a conflict, if we put aside the issue of political committment. Perhaps in the future, given the UK-JP collaboration we might see tighter integration, but as of today, the majority of say, MBDA's portfolio are meant for European platforms, with only the ASRAAM/Meteor integrating with the F-35.

 

[koxinga]

There is a chinese proverb 远亲不如近邻 which means a good neighbour is more important than a distant relative. Currently, our assumptions of US' strategy are the ability of US allies in the region to support them in this conflict. For practical reasons (combat power), only the Japan, South Korea and Australia would make an difference.

What we have not adequately accounted for is North Korea. Kim Jong Un makes Lukashenko looks like a clown. The strategic priority for SK and Japan is unsurprisingly, their own security. Is it possible or even likely that NK takes this opportunity, whether instigated by China or their own decision to provoke SK and Japan? Personally, I think the probability is high. This would tie down considerable resources from all three nations just to have an effective deterrence.

US forces’ priority to deter North Korean attack even in Taiwan conflict: Seoul | NK News

The “priority” of the U.S. Forces Korea (USFK) is to defend against a North Korean attack even if China were to invade Taiwan, South Korea’s defense ministry said Tuesday. The statement comes after former USFK commander Robert Abrams raised the possibility that American troops in South Korea...

www.nknews.org

 

[Ananda]

any potential conflict with the likes of China will see naval and airpower being more important and it would center around trying to interdict forces at stand-off distances.

Agree on the sense Naval and Air power will determine whether any China invasions or Taiwan defense can determine the first stage of war. However even China manage to set beach head positioning, doesn't means ground forces defense cannot make difference.

Taiwan front will be in the size more or less of Donbass front. So building fortified or entrenched ground defense in 'theory' will still can bog down Chinese ground forces in the area near beach heads. So artilery ammo supplies still can make difference.

strategic priority for SK and Japan is unsurprisingly, their own security.

Exactly, this is why in situation of Chinese invasions of Taiwan, big potential they will keep their own armaments and ammo inventories, rather then supplying Taiwan. For that, why CSIS studies put more on US own capacities on supplying Taiwan, rather then US rellies on allies in that matter.

 

[Vivendi]

You talk on the sum of they can provide ? Are you real ? The sum of they can provide is related to amount of Investment they willing to sunk in. Off course it is related. Like it or not Trump is right on that.

Look on what they (Euro zone) can give now on Ukraine war. Most of that is basically emptying what ex Warsaw Pact inventories left. How they expect to help US in Asia ? Even now some of the ammo being sources from ROK. The moments China invade Taiwan in near future, they (US Asian allies) will want to keep it for themselves. So who's US can turn to ? Euro Zone ? Same Euro zone that's now struggling to support US on Ukraine ? Let alone support US on Taiwan.

The articles talk about "if" China invade Taiwan in near future. Something that US can't do much to supply Taiwan, considering they also already need to support Ukrainian.

Your link on Euro zone increase the budgets still just talk, and not related to their MIC production rate. Because they are already neglecting investments on their MIC capacities for long time. So don't talk about their (euro zone) production capabilities if they are not willing to match US investments. Like I said, talking is one thing, delivering is another.

Europe has a huge latent military production capability. If the US is lacking equipment, they can put in some orders. Some examples:

* Naval Strike Missile (NSM) is already supplementing Harpoon. Production line is being established in the US however main production line still in Europe. If US wants more they can order not just from the US production line but also the Norwegian one. And if there is an urgent need, they can also "borrow" a few NSM from some of the 12 (soon to be 15) countries that have NSM in their inventories, to will be back-filled later.

* Ukrainans jury-rigged MiGs to use HARMs. If need be the Americans can do something similar to get access to e.g., IRIS-T, Meteor, Mica a2a missiles, Exocet, RBS-15, JSM, SOM, Sea Agle anti-ship missiles, and Taurus, Storm Shadow/Scalp cruise missiles (some of these already integrated into US systems) and get access to not only existing inventories but also European production lines. The total number of Taurus, Storm Shadow/Scalp in NATO countries seems to be more than 1,600, possibly up to 2,000... how many LRASM does the US have...?

* European naval production capacity can be mobilized -- countries like Spain, France, Italy, the UK, Germany, the Netherlands, Turkey, Denmark, Sweden, etc. all have the capabilities to build high-quality, high-performing frigates, and some can also build destroyers and other warships. All the US needs to do, is to place some orders...

Production in Europe has some advantages, in particular in an all-out war between the US and China, they will both try to damage production facilities in the other country. Thus we should expect Chinese manufacturing to be strongly reduced by the US. I don't know if China will have capabilities to hit US production facilities but if they do, European production facilities will become even more important, and pose a conundrum for China: If they attack Europe, it will turn into WW3. If they don't the US will have access to a continuous flow of weapons and munitions, whereas China will struggle quite a lot to produce.

Europe can assist US in other ways, not just selling gear, and without becoming directly involved in such a conflict. For instance, the US has significant number of troops, equipment and munitions in the ME. The US can rapidly shift this to Asia, and European countries (e.g., Italy, Spain, France, etc.) can step in and stabilize the situation in the ME. There are many different ways that European countries can support the US.

I hope China sees this a bit more clearly and decides to handle the "Taiwan issue" in a peaceful manner and not through a war.

 

[Ananda]

has a huge latent military production capability. If the US is lacking equipment, they can put in some orders. Some examples:

The key points is "Latent", so it is not going to be available soon. Again the talk is how to support Taiwan if China decided to invade Taiwan in near future, as CSIS study. All your talk and example is more on potential, thus 'moot' argument.