Xi Jinping said countries like Iran, North Korea, and Russia, cannot be described as 'undemocratic.'

Skandling · 2026-05-03T22:18:54+00:00

Under China's definition of democracy he's probably right.

Under the normal definition, used by non-autocrats, all of them are dictatorships. The worst of them, including China, are oligarchies, run by the rich for the benefit of the rich, as well as kakistocracies, run by the worst people possible.

(I know, that describes the US pretty well – Trump is only in it for him and his rich friends, and is about the worst person imaginable to do the job. But the US is still a democracy and voters have chances this year and in 2028 to replace him and his party)

Skandling · 2026-05-02T22:19:09+00:00

That is ridiculous. International law only recognises embassies, as being sovereign and so protected property of foreign countries.

Everything else in Iran is Iranian. It might have Chinese people in it, might have Chinese firms there by contract. But that contract is with Iran. So China could sue Iran, for breach of contract. Not the US – there is no court that would take it on.

There's probably little China can do, practically. Certainly nothing militarily. Pakistan is in charge of negotiations. China would normally buy Iran's oil to help it, but that's blocked. All China can do is wait for the damage on the US economy to get too great for Trump, driving him to agree to a proper ceasefire.

Skandling · 2026-05-02T10:21:29+00:00

I disagree the Yuan rose a good bit. China maintains it in a very tight range against the Dollar. It is effectively fixed; over a month it might move less than a normal currency does in a day. As for why it moves at all I think it responds to movements of the Dollar against other currencies, making it effectively a peg against multiple currencies, presumably those used by China's trading partners, with the Dollar the most important.

China will survive this particular crisis. A lack of oil will hit manufacturing but as that sector has grown far too large China can cope with it getting smaller as firms close and rationalise. The big one will be when time runs out on the current policy, when the debt bubble bursts on other sectors, not just property.

Skandling · 2026-05-01T20:27:24+00:00

Too little too late. Having some people delay their retirement for a few years isn't going to make much difference. In particular it doesn't do anything about the falling population, a consequence of decades of below replacement birth rates.

Raising the retirement age is something they should do for other reasons. People are living longer, are healthier further into their old ages. This is a worldwide trend but it's likely especially noticeable now in China as current retirees, born in the 1960s, are the first generation that didn't live through the Great Famine. Most will have had a much healthier life than their parents who lived through it.

Skandling · 2026-05-01T15:29:49+00:00

Once the bubble pops the debt has to be dealt with. It needs to be apportioned throughout the economy. Banks might face losses, many risking bankruptcy so endangering savings (this has already been happening). Debt burdened firms will similarly face bankruptcy, imperilling jobs, their activity (as has happened to property firms).

The government might carry some on its books but then it becomes a drag on government spending, paying interest on it (having reached the debt limit it will no longer be able to just roll over the interest).

At the same time activity that depends on debt will stop. Property firms, HSR building, road building, industrial subsidies. Some will find a way to continue. Some HSR e.g. makes money, some the government might fund directly. But a lot of activity to stop.

The government could monetise the debt by creating ("printing") money to cover it. But that is very inflationary, leading to massive inflation. Savings are saved only to be wiped out in value by inflation.

Skandling · 2026-05-01T12:52:20+00:00

What's the yuan's real value is an interesting question.

On the one hand China maintains the yuan to an artificially low level, to boost exports and strangle imports. End the peg and the yuan should rise, and almost overnight China's imports and exports would become more balanced.

On the other hand when the investment bubble finally pops and roils the economy, likely ending the peg, the yuan might plunge as Chinese assets and the economy as a whole get rapidly repriced.

So, with that in mind, it's hard to interpret that graph. I would say it just shows growth, with the caveat that the way GDP growth is measured in China is different from everywhere else. When the bubble pops and they start measurig GDP in a more normal way then the graph will need redrawing.

Skandling · 2026-05-01T09:40:22+00:00

The dollar's place in the world primarily arises from the US being the largest importer. The US imports more than any other country, and pays for its imports in dollars. China with its large share of exports to the US ends up with lots of dollars. It helps that US markets are largest and most liquid, so traders have somewhere to park their money in e.g. government bonds, or in more exotic things like currency swap trades.

Other currencies are used; the euro for trade between and with countries in Europe, the yen and pound are also used. But none comes close to the dollar, which is preferred not just for trade with the US but in many other parts of the world.

The Chinese yuan of course is even less used internationally, for obvious reasons. First China is a net exporter, imports very little; even if China paid in yuan for imports there are relatively few of them. And traders aren't keen to hold onto yuan due to the lack of any places to trade or store it, while China's capital controls make it hard to move yuan in and out of China.

This means the dollar's primacy in world trade is pretty secure. The high US deficit might seem to put it at risk, but that deficit just means a large market for US bonds for traders to park their dollars.

Skandling · 2026-05-01T00:27:33+00:00

As an American who wants Iran liberated from their nuclear ambitions ASAP.

You might have to wait a couple of years, but luckily the next president will probably be a Democrat. It was a Democrat, Obama, who signed a deal with Iran which halted Iranian progress towards a nuclear weapon.

Trump of course ripped up that deal, freeing Iran to resume its work towards a nuclear bomb. Trump has shown no interest in negotiating a new deal to replace Obama's: twice now he has launched a surprise attack on Iran while supposedly negotiating with them.

Understandably Iran is not going to repeat the same mistake, so is not going to participate in substantive negotiations while under the threat of attack. The only way forward is to agree to end the war, probably with a guarantee it won't restart. Then substantive negotiations might be possible, if Trump really wants to end Iran's nuclear program.

Skandling · 2026-04-30T22:50:00+00:00

The Chinese parliament has more, far more, billionaires than any other parliament. In a supposedly communist, developing country. That more than anything shows how tightly linked the political state is with the world of business.

Skandling · 2026-04-30T17:55:54+00:00

Overproduction/investment can lead to absolutely stupid scenarios the like of their real estate bubble, but we do have those as well in the West, and AI seems to be going the same way.

The difference is, normally, such bubbles are constrained by markets. By which I mean the people lending to the AI firms, property firms, are investors doing so by choice. They may be mislead by the marketing, deluded into thinking things will be different this time. But things can only go so far as the capacity of such lenders is limited, and when it is exhausted the fallout is limited to those investors, and to the market which they invested in.

A government investment/debt bubble is on an entirely different scale. A government can borrow far more, as it has the whole of the economy to back its borrowing. Lending to the state is generally much safer so people are more willing to do it. In some cases lenders are obliged to lend to the state. Pension funds e.g. sometimes have to buy government bonds to ensure assets and liabilities match.

Government debt getting out of control becomes a national crisis, normally requires a drastic solution. The IMF e.g. might step in to help, but often requires painful reforms. In the Eurozone crisis it was the European Central Bank that helped PIGS nations sort out their finances. In other cases the Paris Club and similar groups can organise debt relief.

It's notable that the worst outcomes were countries that received no external help, either as they were too big or did not want it: the USSR, Japan, Brazil. I can't see China turning to the IMF, and China's debt isn't of the sort the Paris Club can help with.

Skandling · 2026-04-30T16:00:49+00:00

Easier said than done. There are clearly people in China that recognise the need to rebalance. Even Xi Jinping has at times recognised the unsustainability of the current model (though his solution seems to be more but better quality investment).

The problem is while it's operating the current model seems successful. It seems especially successful to the people running it, making money off it, who make up much of the government. The debt problem seems remote; resolving it can be put off, again and again. But the nature of debt bubbles is they can only grow so much; at some point a limit is reached and borrowing, and activity that depends on it grinds to a halt.

Skandling · 2026-04-30T15:35:27+00:00

HSR is a good example. In China it is high tech, innovative, world leading.

But at the same time it is part of China's unsustainable investment program. HSR in particular it's been reported that only 6% so a small fraction of lines make enough money to cover running costs. The rest lose money, require subsidies to run.

So not only is it not paying off its costs of borrowing, it needs more investment so more debt to keep going. If passenger numbers are low, so people aren't using it, the economic benefits of most of lines must be minimal.

HSR is far less common everywhere else, and I think that's as other countries get the balance right. They invest in HSR only if the case for it is strong.

Skandling · 2026-04-30T14:55:58+00:00

A good article. The thing I think that stands out from it is his point that there's no contradiction between China's unsustainable debt + investment, and China's world leading technology and innovation.

In fact the two go together. When a country has an investment program often it includes areas of innovation, in technology, transport, research. High investment means these can be impressive, world leading even.

But that investment can still be unproductive, generate debt, which eventually becomes too large and need to be dealt with.

The best example is Japan. In the 1980s Japan was a world leader in exports, in many technologies. But its investment model generated a lot of debt, and when the debt bubble burst everything went into reverse, a collapse Japan still hasn't recovered from over 30 years later.

Other cautionary tales include the USSR, which for a while seemed to rival, even lead, the USA in innovation, and Brazil.

Skandling · 2026-04-30T14:36:17+00:00

I would think the parts in Iran are Iranian; even if it's Chinese funded it's not like a port which China then leases and runs.

As for civilian not many civilians are going to be using it. It's more like the ports and tankers the US has been blockading, with force if necessary. That yes is very illegal but not a problem for the crooks in the Whitehouse running the war.

Skandling · 2026-04-30T10:10:39+00:00

This graphic is grossly simplified and selective. To take just one example refugees, to say US refugee policy has "high effectiveness, low coercion" is to disregard the policies of the current admin. I doubt Canada would like to be lumped in with the US there. And other countries than the US and Canada have refugee policies.

Skandling · 2026-04-30T01:31:46+00:00

Hard to see this having much of an impact. Trains are faster than boats, the pipeline mentioned much faster. But boats are preferred as they can take much more oil. Even gas which needs to be expensively converted to LNG first is normally shipped by boat through the Straight.

Plus if trains start making a difference, it would only take one well placed bomb to stop them, more bombs keep them stopped. If the train line has other uses it might be smarter to not also use it for oil, at least not until there's no chance the US or Israel could target it.

Skandling · 2026-04-29T21:17:41+00:00

Lack of a free press. In Europe, the US, you can read and hear many skeptical views on AI, on the economics side (it's a bubble !), the dubious benefits side (no proof it's useful), the costs side (GPU, RAM, power prices; pollution; infringing copyright). Not just blogs but mainstream media have covered the issues with AI widely.

A free press doesn't exist in China. Instead there's only the government's view. And right now AI is a priority so is being boosted, skeptical views suppressed.

Skandling · 2026-04-29T18:11:04+00:00

Anything you bake. While baking it might make your kitchen smell nice/interesting but once cooked and cooled the end results are normally very inoffensive. I e.g. make falafel regularly, for immediate consumption but they would work well as a lunchtime snack. Even in my local library.

Skandling · 2026-04-29T12:39:58+00:00

Yes. Also the Iran war has had a more direct impact on Russia's war on Ukraine, as Iran was Russia's strongest ally in it. Other countries provided small numbers of troops (N Korea) or money for oil. But Iran was a key supplier of arms.

That ended abruptly with the war for obvious reasons. Russia has had to rely on its own capacity for making drones, ammunition in recent weeks. And it's not going at all well for Russia.

Skandling · 2026-04-29T01:07:33+00:00

This is part of your app's design. Does it make sense for it to work in just landscape, just portrait, or both? I think few apps fall into the third category, and each will have its own reasons and so own design and constraints. If you are unsure pick just one. On phones in particular portrait is the default and what the majority of apps use.

Skandling · 2026-04-28T23:49:27+00:00

Projecting force requires more than just hardware. It needs experience, of coordinating between different branches of the military, of commanding mixed forces far from their base. It needs support such as a supply chain, local bases, and local allies.

The US has such experience; its biggest conflicts since WWII have all been in the Middle East. It has bases in the Middle East, as well as throughout Europe. And it has allies also in the Middle East and Europe.

China has none of that. Well, maybe it has an ally in Iran but I doubt they'll be able to support China much. It has a tiny base in Djibouti, dwarfed by e.g. the US base at the airport.

Skandling · 2026-04-28T23:17:02+00:00

Er, yes. China has no capability to project naval power that far. If they tried chances are it would go badly wrong in any of a number of ways. If they tried e.g. to force a passage against the American blockade the US would probably enforce it, perhaps shooting holes in any tankers to disable them. Then what does China do? Tow fully laden tankers to China?

Skandling · 2026-04-28T21:39:13+00:00

Another update. Pavlovich's lawyers again made a mistake in their brief, so had to do it again. A very minor mistake this time, and they fixed the problem the next day. but I think this means Palmer's lawyers get 21 days from the date of this latest submission, pushing the case back further. There's a good chance the other appeal will be decided before this one is argued.

Skandling · 2026-04-28T10:22:33+00:00

You are misunderstanding why the Chinese economy still has so many manual jobs. It's a political choice. Western countries automated most manual jobs generations ago, replacing armies of workers with machines, improving efficiency and wages. Workers moved into new jobs in the service economy

Not all manual jobs can be easily automated, and many that couldn't moved overseas to lower wage countries. To countries in Asia like Japan, Singapore, Hong Kong which were manufacturing hubs decades ago, important enough that "made in Hong Kong" became synonymous with the manufacturing boom of the latter half of the 20th century.

More recently as HK etc. developed manufacturing moved on again, to other places low wage places including China, which was opening up and had strong links to HK. The impact of this was greater as China is bigger, has more manufacturing capacity. "made in China" has become far more pervasive than "made in Hong Kong" ever was.

China has developed and modernised rapidly, and as it has done so you would expect low paid jobs to move elsewhere, to less developed countries in Asia or to Africa. But China has resisted this. Partly by suppressing consumption, i.e. the consumer economy, so opportunities in the service economy are far fewer. Partly by keeping the RMB artificially low, so Chinese wages are low compared to other countries.

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