https://archive.is/FKuhi (reuters)
https://archive.is/MIdNc (afp)
Chinese Vice Premier He Lifeng met for about eight hours with U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer in Geneva in their first face-to-face meeting since the world’s two largest economies heaped tariffs well above 100% on each other’s goods.
U.S. President Donald Trump said on Friday that an 80% tariff on Chinese goods “seems right”, suggesting for the first time a specific alternative to the 145% levies he has imposed on Chinese imports.
Neither side made any statements about the substance of the discussions nor signaled any progress towards reducing crushing tariffs as meetings at the residence of Switzerland’s ambassador to the U.N. concluded at about 8 p.m. local time. (1800 GMT)
The discussions are expected to restart on Sunday in the Swiss city, according to an individual familiar with the talks, who was not authorized to speak publicly.
The 80% number is just something that Trump posted on his social media early on Friday morning, before any meeting ever happened.
UPDATE Trump posted on truthsocial, 1 hour ago. He describes the meeting with the phrases “total reset” and “great progress”. I won’t believe this until I hear the perspective from China’s government.
You’ve made a lot of unsourced claims here:
What are your sources that China doesn’t have a goal of dedollarizing, or that it hasn’t forgiven debts?
You know better than the PRC’s planners?
If you understand anything about China’s monetary system, you’d know this is true.
In fact, I have laid out the exact mechanism that China can deploy to internationalize the RMB in the second part of my comments. A Chinese-style Marshall Plan is going to be needed if China is even half serious about challenging the dollar.
If you want to earn/save money, somebody else has to be willing to spend first. If the world’s biggest deficit spender decides it wants to stop/reduce spending, then somebody else must step up to deficit spend to absorb all the surplus exports from the Global South. If China still wants to be a net exporter country, then everyone would be competing with one another, racing to the bottom with poorer countries losing out first and allowing IMF to come in and reap a harvest.
China’s insistence to rely on earning foreign currencies through trade surplus such that they don’t have to overshoot their budget deficit target of 3% (an arbitrary value as determined by the IMF) should tell you everything about how Chinese economic planners see their role within the framework set by the IMF.
Why can’t the People’s Bank of China simply create the currency out of thin air to finance development? Why can’t China just go to 5%, 6%, 7% or even 8% budget deficit instead of relying on current account surplus to issue the yuan? But oh no, IMF says we’re not being fiscally responsible if we go above 3%! We want to show IMF we’re the goodest boys and so we continue to suppress the wages of our labor, sell cheap goods to Western countries and let foreigners enjoy cheap Chinese goods in exchange for… a bigger number on my bank account which I won’t be using anyway.
I never said that. China is a country with monetary sovereignty, which means it cannot go bankrupt unless it is a political choice chosen by its leaders.
I said that the property bubble bursting in putting significant financial strains on the local governments’ debt burdens. Last November, the Chinese government unveiled the 12 trillion yuan debt relief program - raising 6 trillion yuan debt ceiling such that local governments can borrow at a cheap rate to pay back their higher rate debt, 4 trillion yuan to be financed through bond issuance, and 2 trillion yuan to be paid as agreed by the initial contracts.
So, in order for the local governments to borrow new debt at a cheaper rate, the interest rate in China has to go down, and what better way to lower the interest rates than the Fed itself lowering the key rates? I never said anything about bankrupting the country lol, as if the world’s second largest economy with the largest industrial capacity can go bankrupt without the leadership doing so by choice. Japan has been on a zero growth trajectory for the past 35 years, and yet I never heard anyone saying about Japan going bankrupt or collapsing or going to become “third world country”??
If you have paid attention to anything I’ve written, in China, the local governments ARE the landlords! And that’s a big problem for the central leadership right now. Mao’s purging of landlords that was completed back in 1954 under the Three Socialist Transformations had been reversed, with quite an ironic twist.
As I have said, the local governments contribute nearly 50% of the tax revenues and 85% of budget expenditures. If the central leadership decides to punish the landlords, the plunging land revenue would mean the local governments running out of money to finance themselves, and that inevitably means cutting spending on public utilities and social spending, and ultimately bring forward a recession. The entire monetary system needs to be reformed, or else being tied to the property market would have disastrous consequences. It’s a damned if you do, damned if you don’t situation.
One of the most significant changes in the Chinese governance under Deng’s reform was the decentralization aspect of the central authority - a clear shift from Mao’s highly centralized planned economy to the relegation of political and economic authority to the local governments. However, what truly precipitated in today’s property market crisis began under the 1994 Tax-Sharing Reform, which imparted the land financing role to the local governments.
What is important to recognize is that under the unique style of Chinese governance, the local/municipal governments are largely responsible for financing developments, while the central government controls the priorities/set focus through the promotion of the local governments bureaucrats. A major performance indicator is GDP growth - and this will become very important below.
After the 2009 GFC, with dwindling export revenues as the world went into a recession, many local governments under financial strains began to look elsewhere to sustain their GDP growth. With the central government’s 4 trillion stimulus package to shift the nation’s priority into infrastructure building, the local government officials found a way to game the system.
Here’s how it works in a simplistic sense (and we know all this, ironically, because of the Evergrande’s court case documents lol): the local government would use its political power to court financial institutions (commercial/investment banks) into issuing new loans to property developers, who would then build new cities, infrastructure, high speed rails etc. to raise the land value. Since the local governments have the power of land financing, they’d be able to ride on the rising land value to reap the profits through leasing/selling land. The calculation is such that the development of new cities and infrastructure would raise the land price by so much that they’d be easily pay off the massive debt they had taken out and even with excess profits to spare. All the investment would made the GDP growth numbers go up, and many local government officials made the career promotion of their lifetime throughout the 2010s.
And I have said this before: the reckless property market speculation starting in the mid-2010s would end up being the biggest misallocation capital in history. Instead of deploying the labor and resources toward ensuring universal healthcare and social welfare, all of that instead went into an asset speculation frenzy that anybody with some common sense would know it cannot possibly last, and yet everyone feared that they would be the one to miss out! This sort of psychology is all too common and so everyone, including the leadership at the highest level, continue to turn a blind eye to it - until the inevitable happened.
Please explain why China shouldn’t use its massive dollar reserves to pay back the Global South’s debt. Why would China need $4.5 trillion dollar reserve (with ~$800 trillion in US treasuries) other than it making the bank account number look big?
I never had anyone who can answer the question but you’re welcome to give it a go, and I promise I will provide a satisfactory explanation in response.
Yes, my sources are actual Marxist economists like Jia Genliang and Zuo Da Pei, who have been warning that the lack of a strong consumer base in China is going to put China in a hugely disadvantageous position when the American empire decides to flip the table, going as far back as the 2000s!
And for the record, you should know that the most prominent economic advisor in China today, Justin Lin Yifu, is literally the protege of Theodore Schultz, the co-founder of the Chicago School of Economics together with Milton Friedman. Lin himself was the first Chinese PhD student to ever graduate from the Chicago School of Economics - the heartland of neoliberalism.
So yes, I am confident in saying that neoliberals are almost always wrong about economics, and even a tiny bit of Marxist/MMT knowledge would put you in front of them.
I have said this before and I will say this again: China’s economics profession has been completely captured by Western-educated neoliberals. Legendary Marxist economists like Xue Muqiao are a thing from the past, and the fervent Marxist ideologues like Chen Yun et al. have long been purged from power since the 1990s during the clash between Deng Xiaoping (who came out of retirement during the 1992 Southern Tour) and Chen Yun (who advocated to stop the liberalization and return to Maoist planning era after the June 4th Incident aka Tiananmen Incident in 1989).
Deng threatened to launch a coup against Jiang Zemin (Chen Yun’s protege) during the Zhuhai meeting in 1992. Jiang folded - and opened China’s road wide open for liberal reform. The vestiges of Marxist ideologues were all purged in the 1990s. Xi is an interesting figure who has (had?) aspirations to turn away from neoliberalism, but as you can see from the ending of Zero Covid to the more recent events - with Li Qiang (from the liberal Shanghai gang) promoted to the Premier and making numerous public appearances and openly boasting about promoting a business friendly environment to the capitalists - it is very clear that Xi is no longer capable of stopping the liberals.
Are you sure? Both Ezra Vogel’s biography of Deng and Isabella Webber’s “how china escaped shock therapy” put Chen Yun in the “cautious reformers” camp they didn’t say he wanted to rollback reforms
Yes, Chen Yun was on the reformer side after the Cultural Revolution but he was still much more in favor of planned economy than liberalization.
After Deng Xiaoping screwed up the price reform in 1988 and after the June 4th incident in the following year, he went into a “retirement” state. The party split into two embittered factions in 1989, with the “conservatives” vowing to turn back the liberalization. Amidst the power struggle, Jiang Zemin (Chen Yun’s protege) was elected as the new head of state, but coming north from the south (Shanghai, Jiangsu), his position was still relatively shaky.
By 1992, Deng came out of retirement to do his Southern Tour, and at the August Wuhan speech, hinted at “replacing the leadership by any means necessary” if anyone dared to stop the reform. The secret meeting at Zhuhai with high ranking officials and generals, not sanctioned by Beijing, caused quite a stir at the very top of the leadership.
This drama ended with Jiang Zemin’s submission to Deng, and pretty much sealed the demise of the planned economy faction. By then, China was already reaching the limits of Deng’s reform and experienced its first economic crisis by the mid-1990s. It would join the WTO in 2001 and usher in the neoliberal era of the 2000s, until Xi came to power in the mid-2010s.
And yes, Vogel’s biography of Deng is excellent. Officially endorsed by CPC, even though certain parts had been censored in the PRC edition - I read the unabridged Hong Kong edition.
Ok thanks for clarifying
This is all gang of four ultraleft nonsense and vibe-posting, with zero sources, to try to drivie home the long-debunked propaganda that China abandoned the socialist road.
If you’re going to claim that the PRC is a liberal country now, and that the CPC “hasn’t been a marxist party since the 1990s”, then there’s zero point in engaging.
No offense, you NEVER lived in China. You have no idea what China was like in the 1990s, in the 2000s.
Deng’s reform had effectively ended in the 1990s with China experiencing an economic crisis with an unemployment rate never seen before under Mao. By 1998, Zhu Rongji ended the welfare housing program and fully opened up the property market to private capital in China. By 2001, it would join the WTO and stripped the last vestiges of worker’s rights in China.
China returning to its Marxist roots is a very recent phenomenon, with Xi ascending to power in 2013. He had vowed to take on the neoliberals on many occasions, which I fully support. As I said, it seems that the libs are still too powerful in China (especially after sabotaging Zero Covid) and if you have been paying attention at all, Li Qiang, the new Premier, has been running the show for a while now, engaging with business leaders and private capital, vowing to open up China’s capital markets etc.
Again, most Western leftists have zero idea on what they’re talking about when it comes to the pre-2018 history in China. They only know Xi and Deng, but what happened in between, few had any clues at all.
All ultraleft vibes, not a single source, yet again.
deleted by creator
For the record I lost all of my notes and references that I had been writing for over a year. This is literally my first day back on Hexbear and I typed all those out from memory lol.
Funny that you literally had a chance to converse with someone who knows so much more about China than you do, and instead of taking this as an opportunity to learn and ask questions, you stubbornly chose to remain ignorant. Typical arrogant Western leftist lol.
You said not two comments ago that you, “know better than the PRC’s planners on how to correct its economy”.
You also claim than the PRC abandoned workers rights by the 90s, and purged all Marxists from the CPC’s leadership stucture.
You apparently know better than the 100 million members of the CPC, that their country is a neoliberal one now? Who’s being arrogant?
I literally named the key authors of the theories I wrote in one of the comments above: Jia Genliang and Zuo Da Pei, who are both Marxist economists who understand the Chinese economy better than most of the neoliberals (for example, who could have seen the consumption problem coming from more than a decade ago?)
If you want a good read (or if you can find someone to translate into English), I strongly recommend Jia Genliang’s 《国内大循环：经济发展新战略与政策选择》 (The Great Domestic Circulation: Economic development strategy and policy choices, 2020) and 《现代货币理论在中国》 (Modern Monetary Theory in China, 2023). I was already doing some of the translation and posted sporadically here until my laptop blew up a couple months back. Nearly all of the author’s points about the mistake of not building up a strong consumer base and doubling down on export led growth, some made as far back as 2013-2015, and how that would make the Chinese economy vulnerable to US unilateral ending the longstanding economic arrangement, is all being played out today.
And somehow you think Justin Lin Yifu, literally the protege of Theodore Schultz and co-founder of Chicago School economics with Milton Friedman, is somehow the beacon of Chinese socialist economics?
And for the record (this is going to shock you), you know I’m a firm supporter of Deng’s reform right? I literally explained above how Deng’s reform ended in the 1990s and the entire 2000s was a wild neoliberal ride for China until Xi came to power in the mid-2010s to rein in private capital.
If you don’t know anything about this period, then I’m here for discussion and education, no need to be so arrogant and dismissive about a topic you don’t understand. The claim that my arguments are somehow “ultraleft” is complete nonsense and only exposes how little you understand China’s history. You have not put up any argument (any substantive pushback is totally fine by me, I like to engage in discussions, that’s the point of this forum) and simply dismiss them as “ultraleft” without anything to back them up.
And for all the historical events, you can simply look them up. How is China joining WTO in 2001, the US-backed organization that literally demands developing countries to strip off labor rights in order to gain a foothold in the global market, somehow a controversial topic here? Are we not agreeing that the WTO is an imperialist arm of the US empire?
The PRC does not suddenly become a liberal country because it has some advisors who studied in the US or worked for the WTO, nor do the excesses and missteps of the wild 90s negate the socialist character of the CPC. The claim that the PRC is now a liberal country, and abandoned Marxism, because it became a member of the WTO, is equally ignorant. The PRC did not join the WTO because it “became liberal”, it did so because its one of the larger international trade orgs, and the PRC’s socialist market economy tends to do a lot of world trade.
Cuba and Vietnam are also both WTO members. Are they also liberal countries now too?
I apologize if I unduly called you an ultraleft, but this one drop of blood fallacy you’re committing here is typical of ultraleft critiques of AES states. “You’re a member of the WTO? You must have abandoned Marxism!”
What argument are you making exactly? There are a lot of members of the CPC therefore it is definitely communist and couldn’t be infiltrated by liberals? It’s not exactly unheard of in history that a communist party would be infiltrated by nationalists and/or liberals.
I would definitely not like that to happen to China but it’s not outside the realm of possibility. Also xiaohongshu seems way more knowledgeable about recent Chinese history than you, you moan about sources yet you haven’t posted any yourself.
Claiming that the CPC abandoned communism and has been taken over by neoliberals is a very bold claim, and you shouldn’t accept it without some sources.
I can provide some alternates, but I don’t know what basis XHS is claiming that on. Is it the standard ultraleft position that the “reform and opening up” was a liberalization? If that’s the case here are some on that:
For a longer text on why the PRC is still absolutely communist, and communist thinking drives the party, I recommend Jin Huiming - Marxism and Socialism with chinese characteristics. Or any of the chinese marxist journals from the academy of marxism which go through what the current difficulties and focus points.
Dessalines vs XHS, a meeting of the minds
Not much of an engagement. XHS claimed that the PRC is now run by liberals and abandoned marxism in the 90s.
I disagree with most of what they say, including this post, I just haven’t read enough history to argue against it. I was hoping the “engagement” would produce some clarity.
Omg are you the real dessalines?
I’ve read (listened?) to a ton of your audiobooks thank you so much for everything.
Yup, no probs!