How long has it been since you saw news about the Belt and Road Initiative? China has not talked about it for half a year, and its Taiwanese cheer squad has also fallen silent.
In August last year, Malaysian Prime Minister Mahathir Mohamad announced the termination of his nation’s big East Coast Rail Link contract with China after he was given the cold shoulder during a visit to Beijing.
Two months later on Oct. 4 when the US-China trade dispute was picking up speed, US Vice President Mike Pence delivered a speech on China at the Hudson Institute in Washington. That was when the world finally saw through the expansionist ambition behind the initiative.
China intended to export its overcapacity in the railway, highway and airport sectors while creating a debt trap to hold other countries hostage, all while supporting corrupt, puppet regimes, of which Venezuela is blood-drenched proof.
It remains uncertain to what extent Chinese President Xi Jinping (習近平) has fulfilled his “China dream” since announcing his strategic goal in 2014.
However, his spendthrift policy has caused a domestic backlash, as the widening poverty gap is intensifying the sense of deprivation and planting the seeds of social unrest.
Xi has had no choice but to spend huge amounts of money to stabilize the situation, further intensifying China’s debt crisis.
Knowing that he could not continue, Xi changed his approach. On Feb. 18, the Chinese State Council announced the Guangdong-Hong Kong-Macau Greater Bay Area plan, which is to bring together Hong Kong, Macau and nine cities in the Pearl River Delta to an economic zone covering 56,000km2 and 66 million people.
The plan adds to the mirage of China’s economic prosperity, which is created by printing money and flipping property. The combined market value of properties in Beijing, Shanghai, Shenzhen and Guangzhou exceeds the value of all property in the US.
Last year, China’s broad money supply, M2, increased by 174 trillion yuan (US$26 trillion at the current exchange rate), more than twice its GDP, and the total market value of its housing market is five times its GDP.
The bubble economy is growing and no one knows how to fix it.
Economics 101 says that printing two dollars to produce something worth one dollar leads to inflation.
However, China uses forceful controls to distort economic laws and directs huge capital flows toward the real-estate market, using it as a reservoir and turning 1.4 billion Chinese into mortgage slaves while the government reaps great financial benefit. As the public’s purchasing power weakens, they have no choice but to become docile, obedient citizens.
Now that the Belt and Road Initiative is broken, China is turning to Hong Kong. Once trapped, the “one country, two systems” framework will be put to sleep and Hong Kongers’ assets will dry up.
Worse still, Hong Kong will lose its century-old reputation for financial freedom as it is sacrificed in the competition between the great powers.
China’s economic volume is 63 percent that of the US, but it issues two times more yuan than the US issues dollars, while the real value of the yuan is anyone’s guess. This is how “red capital” survives.
Late last year, Taiwanese yuan deposits hit nearly 300 billion yuan, but the value of yuan-denominated financial instruments is unclear, something those who fantasize about the currency should consider.
As for Taiwanese businesspeople who have funds trapped in China, all that can be done is to wish them good luck.
Chen Chih-ko is a non-professional investor and a resident of New Taipei City.
Translated by Chang Ho-ming
KMT Chairwoman Cheng Li-wun’s (鄭麗文) recent visit to Beijing and her upcoming visit to Washington will serve as a high-level test of her diplomatic mettle. In Beijing, Cheng was received with symbolic gestures, a warm reception, and high-level access. In Washington, she will receive far less pomp and far sharper questions about the KMT’s vision for the future of Taiwan. Her challenge will be to persuade Washington that the KMT’s engagement with China can coexist with strong deterrence. Cheng’s April 7-12 visit to mainland China coincided with an intense period of conflict in Iran. Despite the strategic significance of Cheng’s trip,
The closure of the Strait of Hormuz has sent the vast Asian chemicals industry into a tailspin. Deprived of the likes of Qatari natural gas and Saudi Arabian oil, the region’s fertilizer and plastics plants are slowing production or even shutting down. Everywhere except China, that is. In petrochemicals, China is unique. As well as a traditional industry that uses oil and gas as feedstock, it has parallel output that relies on its abundant domestic coal. Unsurprisingly, India and other regional powers want to copy and paste the Chinese method. This would not be easy — or climate friendly. The
US President Donald Trump recently repeated his claim that “Taiwan stole America’s chip industry,” reigniting public debate on the issue. As a former Taiwanese minister of economic affairs and an entrepreneur deeply involved in semiconductor supply chain development, I feel a responsibility to clarify this misunderstanding. From the perspective of global industrial evolution and the economic principle of comparative advantage, such a statement appears overly simplistic and risks obscuring the essence of the issue. The rise of Taiwan’s semiconductor industry was not built on “replacing America,” but rather emerged as a result of countries pursuing different development paths within the
Indonesian President Prabowo Subianto says he knows how to fix the problems facing Indonesia. Yet his economic mismanagement and authoritarian tendencies are steering the nation toward a familiar mix of currency instability and political chaos. The world’s fourth-most populous nation risks reversing the hard-won democratic and business reforms that came after the Asian Financial Crisis in 1997. At that time, the rupiah collapsed and the political upheaval that followed forced former president Haji Mohamed Suharto from power. Prabowo’s administration is ignoring similar warning signs. That disconnect was apparent in a national address on Wednesday, when Prabowo projected the swagger that has
RSS