Gotti advises Xi on how to occupy Australia

Via Gottiboff:

First, Australia needs to recognise that it is not all China’s fault. In past years we have behaved badly and contributed to the current situation. At the same time China is now a different country and is ruled by a strongarmed dictator plus the Communist Party. Not surprisingly “The Art of War” offers suggestions: “Build your opponent a golden bridge to retreat across” . . Both China and Australia can apply this advice.

On the Australian side, businessman Trevor Rowe says: “Australia needs to be more patient and cautious in its comments on China — we have to learn quiet diplomacy”. Maybe we could work with China to make 6G mobile systems secure.

On the China side, China might really help the World Health Organisation get to the bottom of the origins of COVID-19. Maybe the coking coal ships can be let sail.

Such small steps will only work if the Australian trade war is simply about Australia. My fear is that it is the prelude to an invasion of Taiwan in the belief that Joe Biden will be a weak president.

Nah. Keep up the bashing, Mr Xi. The accelerated decoupling is definitely in Australian interests.

As for it all being a prelude to invading Taiwan, it certainly is. Though it depends on what you mean by “prelude”. It’s still a decade or two away, in my view. Xi must first absorb and utterly repress Hong Kong.

Why would the CCP do it at all? This:

Development economics understands China well. For decades it has traversed the classic catch-up growth phase followed by many emerging economies. This period keeps labour costs low to develop export markets and investment levels high because there are so many excellent opportunities.

At a certain moment, this model starts to stutter as labour costs increase and investment opportunities fade. This is called the Lewis Turning Point. China has been passing through it now for the better part of a decade.

Beyond that, the classic development path is a period of accelerating growth in wages and rising consumption, as well as a move up the export value chain. These offset declines in low-end exports, as well as investment. See the history of South Korea and Japan.

These processes are all well understood by development economists. Indeed, they were accurately described by Xi Jinping when he rose to power in 2011 as he began a giant “structural rebalancing” of Chinese growth away from investment and towards consumption.

Alas, the good tyrant discovered that it is not so easy when you have too large an economy to support global export dominance, an under-developed social safety net plus a rapidly aging population to support consumption, and investment structures hugely dependent upon public sponsorship and cheap credit.

Following Xi’s reform efforts, growth cratered, perhaps most eloquently expressed in a $38 iron ore price, and he was forced to backtrack just as quickly. Ever since, China has thrown one stimulus Hail Mary after another to keep its growth level elevated lest the slowing jeopardise CCP power.

But this is not a success, it is kicking the can. Do that too much and you fail to lift export sophistication enough, wages and consumption stagnate, and debt ratios plus servicing costs keep mushrooming as malinvestment piles up.

China is well down that path now. Which is also well understood. The path ends with Japanifcation and low growth permanently, made even more certain by China’s similar demographics. The sliding Chinese GDP chart says it all:

There doesn’t need to be a bust, indeed, almost certainly won’t be given China owns its banks. But by 2030, it will still stagnate to Western levels of growth and, when we throw in that it calculates its GDP differently, never writing down its bad investments, in real terms it will be struggling to grow at all.

Rather, what we can expect is that as CCP economic legitimacy fades it will turn increasingly to tyranny, nationalism and eternal hostility to fill the gap.

The CCP war on Australia is a sign of weakness not strength.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


    • Remember the British tv series men behaving badly?

      I’m sure there’s a phd in figuring out just how that predicted Australia’s bad behavior. Afterall the connections are as clear as mud and at the end of it you canprobably conclude we were responsible for the British behaving badly (eg the opium wars).

    • UpperWestsideMEMBER

      Asking them to leave is downright un neighborly.
      We should take a leaf from the enlightened polices and advanced thinking of our northern neighbor and its most glorious leader.
      Offer their people and businesses the exact same freedoms they offer ours (emphasis on exact).
      I think that implies full local capitalisation, majority local board members, local partner with majority ownership and control rights, local audit etc etc. (smarter people please enlighten me)

      Extreme reciprocity seems the only Christian thing to do.

  1. In Gotti’s recent Young Mr Grace rant if you replace ‘China’ with ‘Nazi Germany’ and wind back the clock to 1937ish, the copy is indistinguishable from much of the broadsheet placatory spin back then produced by tame journalists for US isolationists and apologists for corporate involvement (IBM, Ford, Banks etc) with Mr Hitler:

    In 1938, after Japan began the second Sino-Japanese war, Australian unions correctly attempted to boycott Pig Iron exports to them.

    Interestingly, in 1915 the Japanese had made “21 Demands” of China and followed it up with the invasion of Manchuria and then Southern China. It was mostly about trade and economics – “co-prosperity” at the point of a gun.

    China only managed a list of 14 sins against Australia. But it’s all still labelled as ‘co-prosperity’; building the Belt and Road that the Japanese Empire sought in the 1930s and 40s. Like Rome, all roads lead to the builder of those roads.

    • Great points, Clive.

      I have always associated the new China with Nazi Germany, even pre-Xi.

      I have no idea why people refer to the CCP as being the ogre. In fact its China. They are doing what big countries do, and the way they operate has nothing to do with communism. As China has grown it has become an increasingly fascist state with very strong public support (obviously managed by State propaganda.

      In time I think India could go the same way, but its going to be a much longer road since their economy is far less developed.

      Given your statements here, and I presume elsewhere, I was wondering if you have had your property vandalised by Chinese agents. My car was tampered with in 2009 after I wrote to a range of senior parliamentarians against the proposed Chinese purchase of Rio Tinto assets.

  2. working class hamMEMBER

    They are pushing to become the next empire. If the world lets it happen, the future for our kids, looks bleak.
    Once the US dollar falls as the world reserve, the US fails and China fills the void. If you think that the US was a bad sheriff, buckle up.

    • working class hamMEMBER

      The language in the article tries to justify their “defensive” actions. The list of grievances that follows, backs up the narrative.
      Is it even propaganda, if it’s that ridiculous?

  3. China has a plan which drills down in detail in a manner other countries will have to emulate if they wish to survive the coming period of degrowth. It might be the wrong plan but at least they have one. MMT policies we in the west are crawling towards are similar, both are control and command economies with the state deciding on the timing and direction of the usage of the available resources. Both systems no longer care which accounting methods are used in finance as the figures haven’t added up for ages and neither have any need for private savings.

    Once the African iron ore deposits are developed I can’t see China even noticing Australia’s existence.

    • ErmingtonPlumbingMEMBER

      How about the bloke who suggested we work with China to make 6G “more secure”
      Probably got him a 6

  4. 5 years I give it for the first armed conflicts to take place in the Pacific with China. How we USA and Japan respond to it will determine if an invasion of Taiwan is on the cards.

    • ErmingtonPlumbingMEMBER

      The only reason China allows North Korea to developed Nuclear Weapons and ICBMs is to use NK “missile testing” to probe Western Tracking and counter measures technologies.
      Paying attention to what the puppet state of NK is doing is another barometer measuring CCP planning.

  5. He’s probably right about the prelude to Taiwan invasion. The CCP actions against Australia & 14 demands are to demonise Australia as our word & certain condemnation would be a potential threat as Australia had a very strong image as a good & fair country, hence our popularity with average Chinese. So this soft power has to be erased, breaking the image of high quality products is the start, next accuse us of unfairness, covid racism and old racism, and war crimes were the Xmas present Xi for the man that has everything. It is a great propaganda victory that the CCP can point to the Australians who treated China friendship so bad which backs up their basic narrative that “everyone hates China & they are trying tostop China’s rise” because we are so successful”

    Now they are moving onto the EU, they can’t demonise all the EU countries of which the Chinese also have favorable views so a different strategy. Offer the Germans much of what they want to lick in strong trade ties. These have her benefit of driving a wedge between the EU & US, undermining Biden’s ability to form a strong coalition. Also it sows division in the EU, as only a few countries will benefit from CAI agreement, this makes the EU weaker & China stronger. This has been a long term aim as CCP has offered corrupt deals to countries like Italy in exchange for them spoiling EU unity thus weakening EU positions. Once the EU is compromised Xi can invade Taiwan, go down in history & acquire some great tech etc to achieve his other stated goals eg 2025. So I think invasion will be before this as every year lost China’s fundamentals weaken (debit & demographics), assuming Biden is weak & fails to build a democratic front with EU & SE Asia. How can China afford a war when debt levels are so high? Digital renminbi!

    The post Brexit UK will side with US so they can easily be demonised along with US & Australia, 5 eyes.

  6. My ex-boss was kind of like this. Had some kind of idea that the 2010’s was somehow normal and we should desperately try to get back to it. Totally failed to understand the changing nature of the world nor the underlying forces driving those changes.

    And really, the Chinese already know the origin of Covid-19. How could they not? They had a specialist virology institution right on the doorstep. Either they intentionally or unintentionally caused it or they would have been able to figure out where it came from.