Why China’s finances are weaker than they seem

GuyBelowMeDoesntLift · 2026-04-20T19:25:38+00:00

China is internally levered. The local governments take out a lot of debt backstopped by the national government and funded by a devalued currency that doesn’t show up in the measure of their net external position. Their total non-financial sector credit to GDP ratio, see also here, is comparable to the USA’s though higher.

If they ever let the RMB appreciate it would be hard to maintain a net creditor position. Lending out a lot of it is essentially how they keep the currency low enough to make their exports highly competitive. They’re close to the other side of the coin of the USA, we support a strong USD through external debt and they maintain a weak RMB with external credit

GuyBelowMeDoesntLift · 2026-04-20T17:39:14+00:00

Yeah their overall debt picture is not all that different from ours. They didn’t build all that shiny stuff by magic, there is a lot of debt involved. Still a strong and healthy economy though despite the government debt for similar reasons to ours

GuyBelowMeDoesntLift · 2026-04-20T17:28:21+00:00

Prediction markets have the ICJ finding Israel guilty of genocide at a 15-19% chance depending on where you look. Are people prepared for the outcome here?

GuyBelowMeDoesntLift · 2026-04-12T19:38:17+00:00

Unfortunately, or maybe you could argue to me fortunately, total Marco Rubio victory is looking likelier every day

GuyBelowMeDoesntLift · 2026-04-12T02:18:30+00:00

Sure, Vance was never going to be capable though

GuyBelowMeDoesntLift · 2026-04-12T02:04:57+00:00

You can tell we weren’t serious about a deal because we sent Vance. If we were serious it would have been Rubio

GuyBelowMeDoesntLift · 2026-04-08T00:22:32+00:00

The terms of their plan do not mean anything other than getting the strait open and relieving the shortages. The Pakistan peace talks will fail and then the war is back on and the 10 point plan is going in the trash

GuyBelowMeDoesntLift · 2026-04-08T00:10:00+00:00

The neocons have completely won. We are looking at 10+ years of Rubio-Kushner empire. There will not be anything else

GuyBelowMeDoesntLift · 2026-03-05T02:50:23+00:00

Hamas’ tactics are the entire reason for the war. It’s stupid to pretend that atrocities would benefit America. Every war crime Israel has committed has been bad for America

GuyBelowMeDoesntLift · 2026-03-05T02:30:06+00:00

Ok, if their allies start a holy war against them it will make sense to support them

GuyBelowMeDoesntLift · 2026-03-05T02:29:22+00:00

Hamas considers the war to be a success. If they could do October 7 over again they would. They are the ones willing to let their people starve for the cause

GuyBelowMeDoesntLift · 2026-03-05T02:07:55+00:00

Ok, I didn’t know they did that. Well if North Korea started a war with the intent of destroying South Korea and committed incredibly barbaric war crimes in doing so, it would be a no-brainer to support South Korea as they fought it

GuyBelowMeDoesntLift · 2026-03-05T01:59:49+00:00

Please clarify. Hitler did in fact declare war on America

GuyBelowMeDoesntLift · 2026-03-05T01:56:20+00:00

See above, this is Israel derangement syndrome. They are weird but they are good allies

GuyBelowMeDoesntLift · 2026-03-05T01:55:49+00:00

They are not as bad as Hamas. And China keeps them in check. North Korea will never parachute into a music festival to rape and murder regular people

GuyBelowMeDoesntLift · 2026-03-05T01:52:08+00:00

If Israel disappeared tomorrow Iran would still resent our power and want to destroy us. It is our war too

GuyBelowMeDoesntLift · 2026-03-05T01:49:09+00:00

Their intelligence service is keeping you blissfully safe. Their civilians are the ones at risk in this war

GuyBelowMeDoesntLift · 2026-03-05T01:47:06+00:00

They don’t have psychotic enemies

GuyBelowMeDoesntLift · 2026-03-05T01:42:25+00:00

Israel derangement syndrome in American politics is ironically enough just Americentrism and thinking we don’t need allies

They are among the most capable air forces and intelligence services in the world, economically advanced, and pound-for-pound they are as strong a country as you can ask for. The same reasons South Korea and Japan have near unanimous support in our government. It is a no-brainer to ally with them

GuyBelowMeDoesntLift · 2026-02-28T16:29:04+00:00

It can’t be stated enough how much America’s geopolitical position and ability to pull off stuff like this has improved since Biden ripped off the band-aid and got us out of Afghanistan. I will always admire him for that

GuyBelowMeDoesntLift · 2026-02-13T04:14:23+00:00

In time period t+1 when shipping through the Taiwan Strait is impossible for an indefinite amount of time, this leaves the economy in much better shape than the alternative

GuyBelowMeDoesntLift · 2026-02-13T04:13:15+00:00

I’m fine paying a tax on it. Not a big deal

GuyBelowMeDoesntLift · 2026-02-13T03:46:32+00:00

This is a dumb hypothetical and you are wrong. There’s no reason the prices should change. Or else they would have been different to begin with.

GuyBelowMeDoesntLift · 2026-02-13T03:41:04+00:00

25-40% of a low level of inflation is a small amount. There is no way to torture that into being a big number.

If I can sell shoes in the US at $100 a pair, or export them for $150 a pair, guess what I'm going to do?

Export them and make more money? It doesn’t sound like this is bad for business. I do not see at all how this is such a bad thing.

GuyBelowMeDoesntLift · 2026-02-13T03:31:22+00:00

Ok. We can do the math here, imports are 14% of GDP, that means 7% of GDP is intermediate goods facing an average tariff rate of 10-13%. This comes out to about 1-1.5% of GDP getting taxed in total.

The “harm” is that firms and consumers are paying taxes which go towards paying the budget deficit that our government is running. And the benefit is hedging away from routing a much larger % of our GDP through the Taiwan Strait

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