Samir Amin — Financial Globalization: Should China move in?

Must-read. It is not only worth reading but also studying.

Samir Amin, recently deceased, was an Egyptian-French Marxist economist. The analysis presented in this post is spot on.

It reveals the plan of West (US) since China's "opening up" under Deng, and now the Trump Administration in particular, to submit the Chinese economy and therefore China to Western (US) domination both economically and politically.

"Liberalization" is a trap. Europe fell into it, although the UK wisely refrained from joining the EZ and is now disentangling it self from the EU.

This is clear as day to Marxist and Marxian economists, but it is opaque to Western educated economists, including Chinese economists educated in the West that and whose influence is an increasingly weighty in China.

This is a tricky game. Russia has avoided it so far as a result of Western overreach that brought Putin to power. Putin was aware of the abyss into which Russia was falling and pulled back from it. The West (US( hasn't forgiven him for it and is doing all it can to undermine him short of launching WWIII, so far.

China is also a target. We will see if President Xi is up to the challenge. We will also see just how devoted to Marx China really is. Will actions back words?

Western Marxists and Marxians like Samir Amin and Michael Hudson have spelled it out for them.

The post is also noteworthy for pointing out how conventional economics is useless since its models are unrealistic and do not take into consideration how economics, finance, international relations, geopolitics and geostrategy are bound up and interactive in the complex adaptive system of the ongoing Great Game being played on the grand chessboard.

Without understanding the world system and applying this knowledge in economics, economic models generated from deficient assumptions will be useless in the larger picture, which is the one that counts ultimately.

So what is the Trump Administration's strategy in this regard. On the surface, it seems to be contradictory. One one hand, they are pushing ahead with the global trade war, while on the other hand, the economists are on record as free traders and the president himself has said that he would prefer free trade.

The strategy is to place so much pressure on the world economy through US dominance that that the rest of the world submits to US dominance, either though bilateral trade deals that favor the US or free trade on the neoliberal model that guarantees US dominance though multinationals.

The US would prefer the latter but will take the former, too, until the others give up and allow complete "liberalization" under US dominance. In any case, the American Empire becomes a fait accompli.

While it is questionable whether this can be accomplished without major war, the US is fully preparing itself for that too, as are Russia and China, which are the primary targets, named publicly as such by US policy.

Most people have no clue about what is really going on with the hidden agenda at this level. But in terms of the Big Picture it is perfectly "rational." All parties concerned game it out on this basis at the highest levels of government, military and paramilitary ("intelligence").

Defend Democracy Press
Financial Globalization: Should China move in?
Samir Amin

See also

China digging in; Trump doubling down.

Zero Hedge

In recent weeks, Goldman Sachs has likewise been turning increasingly pessimistic.

JPMorgan Sees Full-Blown US-China Trade War In "New Baseline"; Could "End US Stock Market Rally"

Tyler Durden

See also

Review of Conservatives Against Capitalism: From the Industrial Revolution to Globalization by Peter Kolozi, associate professor, Department of Social Sciences, City University of New York.

Chinese culture, which is deeply conservative like Russian culture and other traditional cultures, shares many core values with American conservatism. Anglo-American classical liberalism and neo liberalism (but not German ordo-liberalism) are opposed to traditionalism, of which conserativism is an aspect.

The much of the base of support of the Trump Administration is deeply traditionalistic, hence conservative in this sense.

The Intercept
How the Trump Era Lays Bare the Tension in the Marriage Between Conservatism and Capitalism

Murtaza Hussain

See also

Import substitution and supply diversification.

China can produce enough grain on its own to feed its people, but while maintaining food supply security, it will also expand agricultural cooperation with overseas countries, especially countries and regions along the route of the Belt and Road initiative (BRI), an agricultural official has said.

Experts noted on Friday that China can rely entirely on self-production for main crops, but that for certain farming products, it would be good to have more sources of imports in case there are any significant changes in trade status....

Ecns
China's food security ensured, new import sources set to offset trade concerns
Global Times

also

Ecns
China set to become advanced manufacturing power

Global Times

also

Apropos of the lede link — taking capitalism too far:

A subsidiary of Wanda Group apologized on Saturday and fired three managers who printed an advertisement for a new shopping mall on China's iconic "red scarf" worn by generations of primary school students known as the Chinese Young Pioneers (CYP).
The headmaster at Danyanglu primary school in Heze, in East China's Shandong Province also received a Party warning on Saturday for allowing the advertisement to be printed on the red scarf.

Grade-three students were given the commercialized red scarves, that advertized the opening of Heze Wanda Plaza, during an activity on traffic security on Tuesday afternoon, Legal Daily reported. More than 100 red scarves were retrieved later on Wednesday by teachers. The school also distributed yellow caps to students with the same advertisement. Yellow caps are part of young students' uniforms in many cities in China to make them more visible to motorists.

"Because we found this out early, not many students were seen on the street" wearing the advertisement, an official from the local education bureau in Heze, surnamed Gao, told the Legal Daily....

Ecns

Party, public scold Wanda for misuse of iconic red scarf

Global Times

Also

Ecns
Premier Li stresses reform and opening-up, unleashing market vitality

Xinhua

Dani Rodrik — The great globalisation lie

Third way evangelists presented globalisation as inevitable and advantageous to all. In reality, it is neither, and the liberal order is paying the price....

The fundamental thing to grasp is that globalisation is—and always was—the product of human agency; it can be shaped and reshaped, for good or ill. The great problem with Blair’s forceful affirmation of globalisation back in 2005 was the presumption that it is essentially one thing, immutable to the way that our societies must experience it, a wind of change which there could be no negotiating or arguing with. This misunderstanding still afflicts our political, financial and technocratic elites. Yet there was nothing preordained about the post-1990s push for hyper-globalisation, with its focus on free finance, restrictive patent rules, and special regimes for investors. 

The truth is that globalisation is consciously shaped by the rules that the authorities choose to enact: the groups they privilege, the fields of policy they tackle and those they lay off, and which markets they subject to international competition. It is possible to reclaim globalisation for society’s benefit by making the right choices here.…

A world economy in which these alternative choices are made would look very different. The distribution of gains and losses across and within nations would be dramatically altered. We would not necessarily have less globalisation: enhancing the legitimacy of world markets is likely to spur global commerce and investment rather than impede it. Such a globalisation would be more sustainable, because it would enjoy more consent. It would also be a globalisation quite unlike the one we have at present.

Longish article with lots of history. Worth reading all of.

Dani Rodrik's Weblog
The great globalisation lie
Dani Rodrik | Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University

Michael Pettis — Why market liberalisation now may hurt China more

In the end, while standard macroeconomic reforms may work in theory -- albeit under an unrealistic set of assumptions -- they’ve never worked in practice. Rather than eliminating the controls that protect China from a financial crisis, leaders should confront their debt problem head-on and begin deleveraging.

For that to happen, it would help if the decision-making process were more, not less centralised. Only forceful action from the top can overcome the tremendously powerful vested interests that are blocking the redistribution of local-government wealth.

A more liberal China may be desirable in the abstract -- but not until a more controlled China gets a handle on its debt problems.

Today
Why market liberalisation now may hurt China more

Michael Pettis | Professor of Finance at the Guanghua School of Management at Peking University in Beijing

See also

While China's government debt remains contained, at 46.9 percent of GDP as per latest figures from the Bank for International Settlements, top policymakers have recently raised concerns about a sharp build-up in household debt.

Outstanding household consumer loans have surged close to 30 percent since the middle of last year and reached 30.2 trillion yuan as of October.

Outstanding yuan-denominated property loans amount to 31.1 trillion yuan and individual mortgage loans totals to 21.1 trillion yuan as of the third quarter of 2017, data from the People's Bank of China showed.

Yet, at the same time, China's economy is said to be held back by the traditionally high level of household saving, which is supposedly holding back restructuring from an investment-based economy to a consumption-based one.

CNBC
China's debt is growing at a faster pace despite years of efforts to contain it

Reuters

Jenny Tue Anh Nguyen — The Case Against the Universal Liberalisation Model for Economic Growth

For years, policy-makers have used the United Nations’ country classification, based on per capita gross national income, as the measurement of their country’s development. The aspiration to move up the scale assumes that: 1) economic growth is the international standard measurement of development; and 2) the more one produces, the better one’s quality of life will be. The history of political movements and economic policies has witnessed both successful and failed attempts to move up the scale. The countries that have accelerated their economic growth have been celebrated worldwide and the general perception is that the people in these countries now enjoy a more resourceful life. This attitude towards economic growth has created a presumption that pro-growth policies observed in more developed countries and actively promoted by international institutions could be applicable in other developing countries. Can this classification ever be misleading?

Per capita GDP ignores distributional effects. Conventional economists ignore distributional effects, assuming trickle down, which often doesn't happen, at least sufficiently to make a difference to many people and some made worse off.

Developing Economics

The Case Against the Universal Liberalisation Model for Economic Growth

Jenny Tue Anh Nguyen, a PhD student in Economics at the University of Greenwich

Vladimir Platov — Armenia is Swarmed by Western NGOs

The tactics of employing non-governmental organizations (NGOs) for the preparation of so-called “color revolutions” in North Africa, the Middle East and a number of former Soviet states has been the modus operandi of the US and its satellites, which have been thoroughly discussed in various NEO articles.

It’s curious that these NGOs who are heavily sponsored by Washington choose to act precisely in those moments when a specific state begins resisting pressure applied on it by the so-called Western World. This resistance often is manifested as a reluctance to support certain projects that were put forward by Washington.

If we are to talk about post-Soviet regions, all Western NGOs, and American ones in particular, have been particularly active in Central Asian and Caucasus states over recent years in a bid to launch “color revolutions” across the majority of them.

Western NGOs have been particularly active in Armenia recently, which remains Russia’s most faithful ally in the Caucasus region. In an effort to repeat a Ukrainian-style scenario in Armenia and to force this country away from Russia, these Western-backed organizations have been trying to use any minor concern among the civilian population to provoke demonstrations and unrest, taking advantage of the huge funds they have been receiving.…

It's called subversion and it is a hostile act. That's why it is called hybrid warfare.

This is an aspect of liberalization in neoliberalism as the part of the trifecta of liberalization, deregulation and privatization used to impose transnational global capitalism under the control of the American Empire. Because freedom and democracy.

Platov does have an overactive imagination through, so read with a grain of salt.

NEO

Armenia is Swarmed by Western NGOs
Vladimir Platov

Pepe Escobar — What the Latest Currency 'War' is All About

When the US embarks on perennial quantitative easing, that's OK. When the EU does QE as well, that's OK. But when the Bank of China decides it's in the best interest of the nation to let the yuan go down a bit instead of infinitely up, that's Armageddon.

It took the Bank of China to devaluate the yuan on two consecutive days — moving within the 2 percent band that it's allowed to — for the proverbial global financial banshees to go completely bonkers.

Forget the hysteria. The heart of the matter is that Beijing has stepped on the gas in a quite complex long game; to liberalize the yuan exchange rate; allow it to free float against the US dollar; and establish the yuan as a global reserve currency. 

So this is essentially exchange rate policy liberalization — not a currency "war", as the frenetic spin goes from Washington/Wall Street to Tokyo via London and Brussels.

Sputnik
What the Latest Currency 'War' is All About
Pepe Escobar

ht James in the comments

Bloomberg — Yuan Taking on Dollar Set to Forge $16 Billion Panda Bond Market

Deutsche Bank AG sees China expanding its panda bond market to about 100 billion yuan ($16 billion) over five years, as President Xi Jinping promotes the yuan’s challenge to the dollar’s supremacy....

“Capital account liberalization will accelerate,” said Liu. “We will see more foreign investors coming in. We will see more market opening for foreign issuers.”....

Bloomberg
Yuan Taking on Dollar Set to Forge $16 Billion Panda Bond Market

TASS — Russia’s budget deficit amounts to 3.7% of GDP in January-May — Finance Ministry

Some figures.

TASS
Russia’s budget deficit amounts to 3.7% of GDP in January-May — Finance Ministry

also

Central Bank won't lower the key rate significantly due to ruble weakening risks — experts

Russia tightening during recession. Researching this, I found that Russian economic policy is run by liberals or on liberal principles. The head of the central bank is a liberal, and politically independent, in the liberal tradition of the West that was adopted during the Yeltsin years in which the former Soviet system was liberalized and privatized. So Russia is not like China, the government has been able to marshal economic policy to meet current needs.

Ajay Shah — Things that the government should not do

Liberalizing India, which is one of the issues that Narendra Modi ran on.

Ajay Shah's Blog
Things that the government should not do

Jay Shah | Professor, National Institute for Public Finance and Policy, New Delhi 

EuroINF — Putin: The best answer to sanctions is increasing business freedoms

The President of the Russian Federation said that expanding business freedoms is the best answer to external challenges and limitations. He voiced this opinion appearing at the Week of Russian Business of the Russian Union of Entrepreneurs and Manufacturers.

“Further expansion of business freedoms is the best answer to external sanctions and challenges. Therefore we will continue to establish the most favorable conditions for those who wish to invest in domestic industry and economy, in the development of technologies and modern-era jobs.”

The capital amnesty rules in Russia ought to correspond to all international legal demands, so as not to cause suspicion of money laundering, Putin said. “State and business ought to work as partners to overcome the current poor climate and to trust one another. Esteemed colleagues, we can overcome the poor unfavorable economic climate and to establish a stable trajectory of growth only through a state-business partnership, which of course is impossible without mutual trust. We need to have a shared understanding of the country’s strategic tasks and keep our mutual interests in mind.”

The President emphasized that capital amnesty rules ought to be consistent with the demands of Financial Action Task Force. “They should be absolutely legal and understandable from the point of view of international law, so that nobody should have any doubt that what’s happening in Russia in that respect is wholly in accordance with international law and practice, including from the perspective of not allowing the laundering of money obtained through illegal activities.”....

Who knew? Putin is a liberal. Of course, Putin didn't think this up himself. It was a decision taken in conjunction with the elite. Russia is serious about restructuring.

But freedom is not for the Russian mafia, too. The message is also to unruly oligarchs that they must fall in line with the prevailing rules. Free-wheeling "capitalism" is over. It's also a message to state-owned enterprises to get competitve. Putin is also talking to the bureaucracy (nomenklatura) and deep state (siloviki), saying that it is also about national security and great power status. There will be freedom but it must be coordinated and handled responsibly.

J.Hawk’s Comment: What does all of that mean? For starters, it means Russia is returning (or maybe has returned) not to Five-Year Plans of the Stalin era which, while extremely effective at industrializing the country, also proved extremely difficult to manage, but to Lenin’s “Commanding Heights” model of the economy that was the norm during Lenin's New Economic Policy of the 1920s and which is the norm in today's China, in which the State retains close control over certain strategic branches of the economy (usually through the control of enterprises deemed to be “system-forming” and through state monopolies), while allowing other sectors of the economy to operate under free market principles. This approach is evident in Russia’s import substitution strategy—targeted support for the system-forming enterprises, and maximum liberalization to allow the opportunities created by sanctions and the ruble devaluation to be exploited by private entrepreneurs more swiftly and efficiently than a Five-Year-Plan would.

This duality of approach is also reflected in the composition of the Russian government, with the “statists” clearly predominating, but the “liberals” (which include Siluanov and possibly even Medvedev) playing and indispensable supporting role. Ultimately Russia needs both of these segments of the elite for its economy to function well—the over-dominance by either of the two is liable to cause economic problems, as Russia’s experience of the 1980s and the 1990s has shown.

Fort Russ
Putin: The best answer to sanctions is increasing business freedoms

EuroINF
Translated from Russian by J.Hawk

Original in Russian, Putin: The best answer to sanctions is increasing business freedoms

James Petras — China's Second ‘Cultural Revolution’

From the first to the second cultural revolution — another story of liberalization and corruption.

James Petras Website

China's Second ‘Cultural Revolution’

James Petras | Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia

Red Pill Times — World biggest yard sale is about to take place. Ukraine is quickly becoming a circus show, complete with foreign appointed ringmasters

Where to begin. 

How about we start with the yard sale, everything must go, liquidation, that is about to become Ukraine.

Just as Michael Hudson foresaw as the not so hidden agenda. But I doubt anyone thought that the neoliberal TPTB would be this blatant about the ripoff.

Red Pill Times
World biggest yard sale is about to take place. Ukraine is quickly becoming a circus show, complete with foreign appointed ringmasters

Alexrpt

Peter S, Goodman — China's President Charts Path For 'Comprehensive Reform' Amid Economic, Environmental Problems

"On the other hand, our economy is now faced with a series of deep-seated and structural problems," he continued. "There would not be sustainable development without economic transformation. Therefore, we have decided to build an upgraded version of the Chinese economy, focusing on improving the quality and efficiency of development. While growing the economy, the people's livelihood is our top concern."

Li’s words -- subsequently transmitted publicly in official state newspapers -- warrant particular scrutiny given a much-anticipated party plenum set to convene here this weekend. China-watchers have been anticipating the meeting as a potential milestone, suggesting that it could prepare the way for some of the most meaningful alterations to China’s economy since Deng Xiaoping unleashed the first market-embracing reforms in the late-1970s.

But if the broad outlines of an updated economic policy seem clear -- spread the benefits of development more evenly while diminishing pollution and social grievances -- the particulars are hardly so. As Chinese officials and influential academics discussed the challenges and potential prescriptions ahead of the plenum, they created the impression that the leadership is still grappling with substantial issues....

Again, the Internet and social media:

All the while, a new force is proliferating across China that may complicate the party's control and its willingness to advance reforms -- the explosive growth of social media, particularly among young people.

More information flowing outside of official channels means more public awareness of conditions both within and outside China, generating new demands for freedoms and material gains. This could pressure the government to move faster on reforms in a bid to keep pace with public demands. Or it could spook the party into trying to impede change in an effort to maintain control.The Huffington Post

China's President Charts Path For 'Comprehensive Reform' Amid Economic, Environmental Problems
Peter S. Goodman