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67 thoughts on “Next will be China

  1. Martin Hill

    I think that trying to find parallels between ‘ordinary’ modern peacekeeping operations and exceptional historic cases is not very useful. The destruction of the 1842 expeditionary army has as much to do with modern insurgency and our response to it as another destruction of another British Army at Isandlwana.

    China, sure it’s a rising power and its geographically close. If the country remains/becomes settled enough for China to do its trading thing, then the ISAF job is done.

  2. BertramPantyshield

    My money’s on North Korea becoming a Chinese Afghanistan/Vietnam, with a decade or so of increasing support to try and prop-up the regime. Though I think, looking at the news, I’ll go each-way on the Senkaku/Diaoyu Islands as well.

  3. Jeremy M H

    I kind of find the arrogance of the Afghan guys to be funny really. It is not so much that their resistance is incredibly effective so much as the prize (total control of Afghanistan) is not worth the cost of really doing the job in a full blooded manner. There is little doubt in my mind that the USSR, had it wanted to (or had it been led by someone like a Stalin), could have simply liquidated any resistance in the region. The prize is simply not worth the associated cost.

    One of the major lessons of WWII (and really any major operation in Afghanistan recently) is that insurgent forces cannot survive in the face of an organized field army. They will be destroyed if they fight or have to melt away. At that point it is just a question of how much money you want to spend to keep it tamped down or how ruthless you are willing to be to keep things in check.

    Even if their dying moments in WWII the Nazi’s were brutally effective at crushing any resistance movements with scratch formations and sheer nastiness.

    That being said it was obvious from the beginning the West had no desire to do that sort of thing (spend the money or be ruthless enough) to really quell Afghanistan. Frankly the policy from the get go should have been to be neutral on the Civil War but to actively engage any side of it that sheltered international terrorist. Eventually the calculus would dawn on all the competing sides that allowing groups like that to hang around was simply not worth it.

  4. x

    Only 5% of the Soviet military went to Afghanistan. Now that is some number. Now the conscripts may have not done that well but their special forces kicked the Afghans’ arses; just as special forces do today. Given Soviet history if they had wanted to win they could have done.

  5. Gloomy Northern Boy

    Quite right – the 1842 debacle was as much about political ineptitude and a lack of ruthlessness in Kabul as anything else, and we beat the Afghans up a number of times during the subsequent century…but didn’t stay around to enjoy the inevitable guerilla war. The Soviets were uncharacteristically restrained – probably uneasy about upsetting lefty fellow travellers in the West because they still hoped to win the Cold War. The Chinese won’t give a stuff, so if they come calling the mother tongue of Kabul will be Mandarin twenty years on – see Lhasa in Tibet for details.

    Mind you, if we really wanted our own back we would simply decree that any and all Afghan women but no men automatically qualified for asylum in the UK and then provided free flights..!

  6. wf

    @Gloomy Northern Boy: I suspect the best Afghan insurgency strategy would be to build roads and mobile phone networks, but reserve all the other development money for areas which allowed womens education. It’s hard to be hardline when you have no followers :-)

  7. Martin

    @ Jeremy M H – I agree about the arrogance of the afghan guy. Does he think we spent billions in his country for our benefit. He can f**k off with the rest of them. Our problem with victory in the stan is our definition. We got rid of almost all the original Taliban and alqueda pretty fast. Now anyone who does not like us in Afghanistan is Taliban. AKA the only way to win is to get afghans to like us. The only way to do that is to stop there country being a s**t hole. Since their country is and has always been a s**t hole we are never going to be able to turn it into anything else aka the Afgans are never going to like us no matter how many of our soldiers die for them or how many women’s only merry go rounds we build them. I think post 2014 the west should do everything it can to encourage the Chinese to take over. Maybe they wil have more luck with their bestes buddies in Pakistan. If India does not like it they can f**k off as well. If they wanted help they should have bought Typhoon :-)

  8. Jeremy M H

    @Martin

    I think the biggest mistake NATO made was trying to fix the nation up. By far the best bet would have been to simply change the calculus of the various factions there.

    For the Taliban it was a net positive to have Al Q around. You got a hard and committed force of soldiers who would help you out when you needed it in exchange for the political cover. All we really had to do was make the situation such that having groups like that around meant you lose. We saw what air power and some special forces could do in 2001-02 there. The message from us should have been from day 1 that we won’t occupy the nation but if you do things we don’t like we can make sure your opponents can run over your ass if they want to.

    That is a mission that can be accomplished, is well defined and is not all that expensive to achieve.

  9. Martin

    @ Jeremy M H

    I agree, I recon the Taliban s**t a brick in 2001 but they could not hand of Al Queda for their own reason’s. It would have been more of a deterrent to future regimes if we hit them hard and left after the initial job was done. If we had to stay to produce some form of better government then we should have stayed in Kabul and fortified it then trained afghans and sent them out to the regions.

    Now any crazy islamic movement thinks if you bring in the terrorists then you will get your guaranteed Jihad with western forces driving up and down the same road for ten years so you can use your IED’s. Then when they leave you will be able to claim you defeated Britain and America.

  10. Gloomy Northern Boy

    @Martin – I hardly dare disagree, but I am not to sure about the Chinese option; we will have enough trouble with them in the forthcoming Century without smiling on the further extension of their existing land empire – which is the only one still standing – mostly because they have conned everybody into believing that they are an homogenous state without imperial pretensions; not true now, and actually never was…

  11. Waddi

    Here are some stats

    US GDP $15094bn
    China GDP $7298bn

    But if China had the same GDP per head of population as Greece then China’s GDP would be $36532bn double the USA! Estimates are that China will overtake the US in less than 10 years.

    The only reason they would bother with Afghanistan was if it stuffed full of resources. Perception is that is isn’t. Also they already have a Muslim minority that is starting to kick up a fuss, would suggest they don’t want more trouble unless it was financially worth their while.

    China will dominate not by military power but by economic power. They are already “colonising” parts of Africa, not for social or geopolitical reasons but because they want what is underground. Mongolia and some of the others “Stans” with proven resources would be higher up any expansionary agenda. Top of the list is of course Taiwan and they are technically still at war with India, Afghanistan must be a long way down.

  12. Chris.B.

    All I can say is; three cheers for the 44th Regiment of Foot. East Essex. The finest part of England and no arguments ;)

  13. Martin

    Chinese will need to find some new form of energy I.e. nuclear fusion or anti matter to get themselves to the same living standard as the average Mexican let alone the average e Greek.

  14. All Politicians are the Same

    Once you get outside of the bits of China they want you to see much of th population lives in the 12th century not the 21st. No electricity, ox drawn ploghs etc are all common. They are also ruining their water supplies and causing deforestation and creating deserts at a speed that beggars belief.

  15. Waddi

    Bit like Britain in the 19th Century then, just as we became the dominant Global Superpower. Cheap labour is what is driving growth. China’s restriction will ultimately be lack of population as the one child policy comes home to roost. Countries such as China, India with huge populations and no welfare state to squander tax revenues on will dominate financially whilst still having a standard of living equivalent to 1950s Britain.

  16. Gloomy Northern Boy

    @Waddi – until the massive disparities between rich and poor (at least as bad as France in 1789 or Russia in 1917) provoke revolution and civil war; likely to happen when the Party/Urban Elite require their mostly peasant army to open fire on their own grannies. Then all bets are off.

  17. All Politicians are the Same

    @Waddi,

    They are pretty close to an African style famine scenario. It really is unbelievable the manner they are ruining their country. A lot of their population cannot aspire to 1590s Britain. It will all implode long before it will dominate anything.

  18. Waddi

    If China implodes as you all predict then be prepared for 1930′s style long term deflationary depression as the majority of the global growth is coming from that country. Since 2009 what economic recovery there has been has been almost entirely due to China’s reflationary measures. When they slowed down last year to choke off inflation we went back into recession and the US nearly did. The West needs China far more than China needs the West, especially as China is bankrolling both the UK and US as the biggest holder of the respective national debts. The Global economy is a zero sum game. All the debits are in the West, all the credits are in China.

  19. x

    “The Global economy is a zero sum game.”

    Um. No. Fiat currency means we can keep printing money. Or just add more servers as it is all 1s and 0s these days. It is abstract artificial system. Also it all depends on what has “value”. Tulips for instance.

  20. All Politicians are The same

    Waddi,

    The West needs China far more than China needs the West, especially as China is bankrolling both the UK and US as the biggest holder of the respective national debts. The Global economy is a zero sum game. All the debits are in the West, all the credits are in China.

    Debts are numbers on a computer they need a functional Government to collect them and we can fiance them quite easily, the fact we have debts because we choose to look after the vast majority of our population leaves me with little sympathy for the Chinese.

    if they actually chose to build infrastructure outside of the select few locations and look after their population they may not end up unable to feed their or control their population down the line.

  21. wf

    @APATS: err, no, we own China. They need us to pay interests on those bonds, or they have lost an awful lot of money!

    I would be cautious about believing all the economic figures re China. They tend to measure production, not consumption, and their state sector owes all concerned a very large amount of money they can never pay back. An insane property bubble is more a symptom or zero trust in Chinese banks….

    Long term, the Chinese population crash starting next year will doom the “next superpower” meme.

  22. Waddi

    I sense disbelief about the Chinese economic miracle and if you read the usual newspapers there is plenty of evidence to support the above arguments. My own direct experience is that China is much further on than you think and reminds me of South Korea maybe 5-10 years ago. Who would of thought then that Koreans would sell more cars in the UK than Peugeot and Renault or that Samsung would sell more smartphones than Apple? The boys on the production line at Bentley and Jaguar need China as do most of the constituents companies of the FTSE100. Don’t underestimate China, the Americans aren’t.

  23. Gloomy Northern Boy

    @Waddi – if we believe the numbers, the USA is a basket case and so are we; wise rich people would be investing in the Yuan, buying penthouses in Beijing and fighting in the streets for a Chinese Passport. Oddly enough they keep their cash in Dollars, buy their town-houses in Mayfair and move mountains to get a passport from the Anglosphere or (some) of Western Europe.

    Why this oddly irrational behaviour? Because they know the USA will stand behind the words on a dollar bill even with Obama in the White House, Boris Johnson couldn’t even stick them with an unearned parking ticket, and those with only a Chinese passport and enough dosh will almost always have an exit route planned…

    In reality the apparent numbers are a very small part of the real picture, and we all know it.

  24. Waddi

    I have just been assisting a hundred year old UK company to change legal domicile to China, it took forever not because it was difficult but because so many other companies are doing it. Agreed re Beijing property but try buying property in Hong Kong, Mayfair is very cheap. Technically you can’t buy Yuan if it was free floating it would be very strong, so you buy the next best thing, Gold and Swiss Francs not the Dollar as that is dropping like a stone if you are a Chinese investor. The Chinese elite including the Generals do keep their money offshore, just in case they are sent for re-education, guess where? Taiwan, the country they are at war with.

  25. Jeremy M H

    @Waddi

    And what would happen to the Chinese economy if the Yuan were allowed to appreciate to its proper value?

  26. All Politicians are The same

    @Waddi

    “Technically you can’t buy Yuan if it was free floating it would be very strong”

    You actually sum China up in that one sentence. they control, what they want us to see. They hide the peasant Labour huge new deserts, dead rivers, starvation and smog that clog their country behind shiny facades. Anything they cannot hide they artificially control.

    However the former is growing faster than the latter.

    Jeremy M H

    Their exports would be realistically priced. Of course if they paid any attention to patents etec they wouldn’t have many exports.

  27. Waddi

    Depends on the magnitude of the increase, it would have to rise to the extent that companies such as Foxconn would the shift production to another lower cost area with the same volume and skill of available workers. Maybe India or Indonesia, perhaps even the USA the options are limited you simply couldn’t open a high-tech factory in the UK not like you can in China.

    The biggest impact would be on western inflation as China puts up prices knowing that the likes of Apple or Samsung can’t move production to anywhere else overnight.

    China is trying to shift it’s economy towards domestic consumption and there is a dash for technological leadership in key industries, have a look at the current 5 year plan, no cheap TVs or cars all high tech and designed to leapfrog the West. My tip though is that India will be even bigger but they are 5-10 years behind China and have the pesky problem of having politicians, which means building a large factory is a nightmare.

    http://www.kpmg.com/cn/en/issuesandinsights/articlespublications/publicationseries/5-years-plan/pages/default.aspx

  28. wf

    @Waddi: most of China cannot put their money abroad, hence the real estate bubble. When that all goes bang, those are the people who will come gunning for those who *could* stash their cash elsewhere.

    Working for a company with a large Chinese interest as I do, you very rapidly realise why no one bases their company in China if you can avoid it. If you have enough guanxi, the law means nothing. If you piss off the Party, the law means nothing.

  29. Waddi

    Communist Party or Royal Bank of Scotland? If you are in business who is the most evil….. difficult choice.

  30. Gloomy Northern Boy

    @Waddi – Have the Directors of said Company moved to China with their families, taken up Chinese Passports and liquidated their UK assets? If not that is a reversible business decision, not a permanent vote of confidence.
    Hong Kong property is indeed very strong because of high demand from rich businessmen who often have another home and a different passport (even those born there); and China proper is careful to maintain a very light touch in respect of that particular golden goose; it is a special case with a vengeance…and an oddly British feel.
    @APATS and Jeremy MH have covered the Yuan.
    Last time I looked the money elites of the old Democracies only hid cash overseas to avoid tax, and did so at the risk of public vilification; they also rarely included Generals, who in our system are not normally motivated by the opportunity to get rich using slave labour in enterprises owned by the Army – this last point seems to prove rather than disprove my argument!

  31. Chris.B.

    “My tip though is that India will be even bigger but they are 5-10 years behind China and have the pesky problem of having politicians, which means building a large factory is a nightmare.”

    Never mind the politicians mate, be more worried about the electricity supply. A supply that can’t even stay on all day under the current circumstances, let alone trying to fuel some economic boom.

    Remember when New York celebrated recently going a whole day without a murder? Indian cities will start celebrating when they can get 24 hours of uninterrupted electric.

  32. wf

    @Waddi: for my sins, my mortgage is with RBS :-)

    However they screw up their business, they won’t send me to a laogai. A sense of proportion might be in order!

  33. Gloomy Northern Boy

    @Waddi – RBS had an unpleasant and hubristic boss and in consequence made some idiotic business decisions which disgraced him and left the rest of us with a nasty hangover, but one from which we will recover in more or less democratic shape, poorer but a little wiser.

    The Chinese Communist Party has cheerfully killed people in numbers greater than Hitler and Stalin combined, and are still diligently running a system doing much the same thing albeit on a reduced scale (at the moment, and because it suits them).

    On balance, I think I prefer RBS…

  34. Waddi

    Are you all seriously suggesting that China the second largest economy in the world is going to self destruct and go back to a peasant society? If that does happen the financial consequences on our day to day lives do not bear thinking about, who has an Hsbc bank account? Better close that and use the cash to buy cigarettes. It could happen, just as many predicted that Hong Kong would turn back into a fishing village, but the odds of a Chinese collapse are slim at best and I for one sincerely hope it doesn’t happen as China is already so important that if it did we are all fucked! You may not like China but better get used to it.

  35. Jeremy M H

    @Waddi

    I don’t think anyone said collapse. But anyone who thinks that the story of China will be that of an uninterrupted rise is kidding themselves as well. The problems China faces going forward dwarf those faced by the Western world.

  36. All Politicians are The same

    Waddi,

    Nobody wants it to happen but China is a house of cards, within decades it will not be able to feed itself and will have run out of water. it is turning arable land into a wasteland at a horrible speed and pollution is on a scale never ever seen before.

    Now I would have nothing against China if it stopped this mad rush ahead and.

    1. Stopped the crazy pollution and ruining arable land.
    2. Used its wealth to get its population out of the middle ages.
    3. Respected patent laws and stopped blatant industrial espionage.
    4. Allowed its currency to float on the world markets and adhered to trade treaties.

    In real life what does China supply us with that we in the Uk could not do without or get from elsehwere? If qatar stopped supplying us with natural gas we could be in big trouble if China goes down the swanny the IPADS go up?

  37. Phil

    The environmental problems in China are interesting. It seems that the Central Government can see the bigger picture re: environmental destruction but local government is apparently more concerned with manufacturing and economic growth and thus there is starting to be a big tension. Interestingly central state media have started to produce stories on pollution that are very critical. I think this is Central Government starting to mount a campaign against the local fixation with economic growth at any price.

  38. Jeremy M H

    @Phil

    It is interesting because the local leaders are probably worried about what to do with their people if they can’t find them jobs. Add to that the fact that there is little to know side money to be made protecting the environment and I predict an uphill battle for the national government on that one.

  39. All Politicians are The same

    Waddi,

    Less than 30% of UK National debt is held by foreign investors. China has been a net seller for 2 years of US debt.

    To say we would run out of money is simply preposterous. Considering we are acting to reduce borrowing already and any hole in world markets created by China not buying would simply be filled by other economies it is hardly about to bring us to our knees.

  40. Phil

    I don’t think they have a choice really. Im an environmental determinist – I cannot see how you can expect to function if you destroy the very things that keep the human body in homeostasis let alone maintain a massive civilization.

  41. Waddi

    APATS it is not preposterous, the only major economy in the world with cash on its balance sheet is China. If that surplus cash disappears they will be a forced seller of sovereign bonds to repatriate cash. By selling yields rise and thus so will base rates. Then in this collapsing market as each gilt becomes due for repayment HMG has to issue new longer dated ones at much higher cost or stop spending. Just the scenario faced by Greece, Spain et al. You have to find buyers not just for Chinese selling but for new issuance as well by then the market would be in freefall. This would happen at the same time as China would be selling Treasuries and Bunds so what investors are left can pick or choose. This is a credit crunch and it only takes a small amount of issuance not to be funded and a country runs out of cash. All of the other countries in the world with net cash? Brazil, Canada, Australia have this cash from selling to ….. China. Throw in commercial banks needing short term cash and central banks unable to print money as interest rates rise then the ATMs will suddenly be empty. Just as they nearly were in 2008.

  42. All Politicians are The same

    Waddi,

    if China cannot feed its population or supply them with water it had bigger issues. also any collapse in central Government would see our debt to them look pretty dodgy as they may no longer exist.

    they do not own enough of our debt to make that much difference and that they do is on agreed terms that them selling it on would make any change their issue not ours.

    Economies run on products so if the market was no longer receiving products from China then other nations would take up the slack.

    We survived before they became prominent and could easily do so again.

    Contrary to some economic theory the world would not get SARS if China sneezed. A cold yes but nothing some sensible politics and reorganization could not overcome.

  43. jedibeeftrix

    @ APATS – “To say we would run out of money is simply preposterous.”

    Not quite the same thing, but BIS working paper 40 does suggest Britain (yes, even austerity Britain), will still have national debt of 400% of GDP and be using 27& of government revenues (i think), on servicing debt interest.

    Would indicate that we will be reliant on foreign buyers of gilts for many decades to come…..

  44. wf

    @Waddi: they are mortgaged up to the hilt. The number of state owned enterprises with colossal loans to state and other banks has been a staple of Economist articles for 15 years…sooner or later it will collapse. The country won’t fall to bits, but it’s going to have one hell of a headache!

  45. Martin

    @ waddi – 90% of UK gilts are in British hands. UK pension funds hold almost all of them and if they could by more they would thats why the price is just 1.6%. I don’t see China returning to the Middle Ages but the middle income trap is almost impossible to break. South Korea is the only largeish nation to have done it and only just. Well their companies and doing well for now there population demographic is hideous. China will have much the same problem. I would love to welcome china on to the world stage but they have to stop acting like some rouge regime threatening neighbours and backing nuclear armed dictators for no reason other than to piss off the west.

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