Tuesday, January 25, 2022
Macroeconomics of Chinese kleptocracy
china tiananmen square

China is a kleptocracy of a scale never seen before in human history. This post aims to explain how  this wave of theft is financed, what makes it sustainable and what will make it fail. There are several China experts I have chatted with – and many of the ideas are not original. The synthesis however is mine. Some sources do not want to be quoted.

The macroeconomic effects of the Chinese kleptocracy and the massive fixed-currency crisis in Europe are the dominant macroeconomic drivers of the global economy. As I am trying a comprehensive explanation for much of the world's economy in less that two thousand words I expect some kick-back.

China's Leadership Structure and Transition
standing committ

With attention focused on China’s leadership transition due to an unusually large number of positions up for grabs and Bo Xilai’s dismissal from his communist party posts, the US-China Business Council recently released a report outlining China’s leadership structure and transition.W

China’s 18th Party Congress, scheduled for this fall, marks the beginning of a large turnover of China’s top government and communist party leadership.

Why China is likely to end in disorderly economic collapse
chinaflag building

There is a crisis of confidence unfolding in China that is likely to end in a full scale capital flight and a disorderly collapse in both economic and political cohesiveness. The lowering of the reserve requirements for Chinese banks, while reported in the media as a loosening of credit, is more likely an early sign of capital flight. Similarly reflective of this, are the large increases of gold purchases by Chinese citizens who have few diversification options away from the RMB.

China's red royalty
A GlobalPost infographic charts the children of China's political elite.

HONG KONG — They are referred to as "princelings" for a reason — mainly because these children of Communist leaders are resented by many in China, and elsewhere, for the privileges they receive as a birthright. What they do with these privileges is what determines how the headlines about them are worded.

Among 100 government officials, 101 of them are corrupt
bo guagua xilai son

While I usually refrain myself from making comments on the political aspects of China, I can’t help but to reflect on the recent dramatic purging of Bo Xilai.

While I am not going to make any economic point regarding the short-term impact of the purging (because there is none, and there are probably better things to be worried about), I do want to talk a little bit about some deeper issues that is very widespread, yet hardly ever mentioned within any economic discussions (and indeed, even I have had this in mind for quite a long time, I have never ever discussed here).

Beautiful and Absolutely Hideous Pharmaceutical Factory

Sixth Pharm Factory went viral on Chinese internet, showing Versailles-style furnishings and domes and hallways decorated with gold-plated woodcarving.

The state-owned company was soon met with a barrage of online criticism for its extravagance and waste of public funds. However, a person in charge, while acknowledging the building as theirs, argued that those rooms are not used as offices; instead, they are exhibition rooms of a museum they have built to house woodblock prints.

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