"Megara Trap" China- Japan- US Relations

[PikeStance]

I found an interesting article. It discusses the dangers of embargoes and specifically the ‘Megarian Trap.’
The Diplomat: US-China-Japan: Beware the ‘Megarian Trap’

“That decision may be judged irrational or merely a miscalculation of likely consequences, but it is like many similar ones throughout history in which passion inspired by old hatreds and wounded honor are the cause of dangerous actions.”- Donald Kagan

As the United States and China continue to play geopolitical chess in Asia, forming or renewing economic political and military alliances, it is pleasing to note that leading scholars in international relations from both East and West have once more turned their attention to Thucydides, the 5th century Athenian historian. More than two millennia old, Thucydides’ work has nonetheless become a center of vigorous debate among American and Chinese strategists alike, with the Chinese political science association dedicating a panel to it at its annual 2014 conference in Beijing. Whereas scholars and generals once looked to the Peloponnesian War to understand the conflict between U.S. naval power vs. Soviet land power, today they study it in hopes of neutralizing the rising security competition between a status quo power, the United States, and a rising/recovering power, the Peoples Republic of China.

But for all the interest in the study of classical antiquity, one area that has not received as much attention as it might is the comparison between the Athenian and Chinese ability to coerce an adversary through economic clout. Like Classical Athens, China today has repeatedly used its economic muscle to coerce states bold enough to confront it. The most recent case is the boycotting of Japanese brands. Four years ago the embargo on rare earths almost strangled the technology-intensive and export-dependent Japanese economy. And now latest reports highlight the downward trend in Japanese investments in China, suggesting the technologically hungry Chinese economy may be about to pay a similar price.
To read more click here

I am interested in people thoughts on this. I find the analysis to be very interesting. Economic rules the roost in global politics. What is inconceivable today, may not be in the future. Is China and Japan fanning a flame into a wildfire for the future?

[Condottiere 40K]

You'd have to understand how the investment of actual capital and the transfer of technology ties into either GDP growth or market competitiveness.

[PikeStance]

I look forward to your elaboration!

[Condottiere 40K]

You won't get it, since a lot of economics does appear like voodoo to me, and I suspect it's more of an art than a science; plus not even the Japanese would be blind enough to transfer cutting edge technology, and there are plenty of profit driven Western corporations clamouring for a piece of the Chinese pie, willing to compromise their country's strategic interests in their short term scramble.

So I don't think that the PRC would suffer greatly from getting cut off from one source.

On the other hand, the gentle across the board squeeze that is slowly gripping the Russian economy is more fascinating to study.

[PikeStance]

I am not seeing how this is connect with the topic of discussion in the article???

[Dante Von Hespburg]

I found an interesting article. It discusses the dangers of embargoes and specifically the ‘Megarian Trap.’
The Diplomat: US-China-Japan: Beware the ‘Megarian Trap’

“That decision may be judged irrational or merely a miscalculation of likely consequences, but it is like many similar ones throughout history in which passion inspired by old hatreds and wounded honor are the cause of dangerous actions.”- Donald Kagan

As the United States and China continue to play geopolitical chess in Asia, forming or renewing economic political and military alliances, it is pleasing to note that leading scholars in international relations from both East and West have once more turned their attention to Thucydides, the 5th century Athenian historian. More than two millennia old, Thucydides’ work has nonetheless become a center of vigorous debate among American and Chinese strategists alike, with the Chinese political science association dedicating a panel to it at its annual 2014 conference in Beijing. Whereas scholars and generals once looked to the Peloponnesian War to understand the conflict between U.S. naval power vs. Soviet land power, today they study it in hopes of neutralizing the rising security competition between a status quo power, the United States, and a rising/recovering power, the Peoples Republic of China.

But for all the interest in the study of classical antiquity, one area that has not received as much attention as it might is the comparison between the Athenian and Chinese ability to coerce an adversary through economic clout. Like Classical Athens, China today has repeatedly used its economic muscle to coerce states bold enough to confront it. The most recent case is the boycotting of Japanese brands. Four years ago the embargo on rare earths almost strangled the technology-intensive and export-dependent Japanese economy. And now latest reports highlight the downward trend in Japanese investments in China, suggesting the technologically hungry Chinese economy may be about to pay a similar price.
To read more click here

I am interested in people thoughts on this. I find the analysis to be very interesting. Economic rules the roost in global politics. What is inconceivable today, may not be in the future. Is China and Japan fanning a flame into a wildfire for the future?

It's an interesting notion though (ironically considering usual historical perspective!) it's very pacific-centric. By this i mean that China throwing it's weight around against Japan while being economically disruptive, i can't see it throwing the world into Chaos. Especially as the article writer doesn't seem to consider the EU a unified body (a fair enough opinion), and so disregards that the EU is and still would be the worlds largest economic block, which is currently negotiating a free trade agreement with the US- such a thing potentially could lessen or stop the gap between China and the US (and the EU still remains number 1- again providing we consider it a united entity- which for economic purposes it really is).

Also a more relevant and interesting dynamic to explore is actually that between the EU and China who frequently engage in trade-wars with one another for the most ridiculous reasons. Despite the EU being China's biggest trading partner, and China being the EU's second largest.

The EU is China's largest trading partner,^[4][5] and China is the EU's second largest trade partner after the United States

http://en.wikipedia.org/wiki/China%E...nion_relations (Wiki i know, but just to source my point here, it's also well referenced).

Add to this another interesting dynamic- the arms embargo which the US and Japan has on China, and which they put pressure on the EU to maintain, well the EU negotiation talks with China for the 2007 Partnership and Co-operation agreement (implemented 2008) rather skirted around the issue- but China voiced the idea that perhaps the EU and China get become even closer if the EU looked into it's own interests. http://trade.ec.europa.eu/doclib/doc...doc_140579.pdf

So what i'm outlining here as a general premise, while the article is interesting, by subjectively disallowing the EU as a united economic body, it's rather shaped a situation where Japan-China- US axis is more of an issue than it actually is.

Combine this with the never-ending economic debate about China- 'China's rise', 'Chinas stagnation', 'China's decline'- no one is entirely sure that the state will become a premier economy, or if it will fall short of this

https://www.google.co.uk/url?sa=t&rc...,d.ZGU&cad=rja (Some economists would fall on this info and present it as a sign that China's ascendancy is far from certain, and indeed is seemingly slowing it's growth).

http://www.bbc.co.uk/news/business-28305184 (On the other hand, prior to it's growth falling we have reports like this- China's rise- government are getting over stagnation).

As you can see analysis is rather schizophrenic, changing wildly at every single little case- here from 'It's growing, the Chinese government economic stimulus is kicking in (though it could be argued the fact that such a stimulus is needed belies structural issues)' to 'It's stagnating, downgrade it!'

Indeed as i was just saying that, i read this from the article:

Stimulus dependent?However, Chang Jian, an analyst with Barclays, suggested that while the latest growth numbers were in line with expectations, "the underlying momentum and recovery is still in a fragile state".
She cited the recent slowdown in China's property market - a key contributor to its growth - as an area of concern.
"The biggest risk for the second half is property correction and related financial risks," she said.
Ms Chang also added that "the recovery is quite dependent on government support".

.

So yeah. The article in question from the OP makes a lot of assumptions- A world without the EU and it's economic influence, and a world in which China's rise is a dead certain (myself i can't say on this issue due to the schizophrenic nature of economic reports towards China- though it does need economic structural reform to ensure stability in the long term).

Saying that though, if we accept the 'Megarian Trap' article as one which looks at a very specific set of events, without regard to wider context. It's a very interesting issue for Japan and the US. Though in the bigger picture as we've seen, China attempting to use economic coercion on larger powers has usually met with equal hostility, and so we don't really ever see the 'Megarian Trap' come to light in any other worldwide context beyond perhaps Japan. So the article authors seeming warning over worldwide instability due to Chinese economic coercion is rather unfounded i'd feel. It seems a lot of grasping at a historic incident and trying to make it fit to the modern day.

http://www.reuters.com/article/2013/...99N18K20131024 Again the EU here engage with China as equals in terms of resolving differences:

Europe is China's most important trading partner and for the EU, China is second only to the United States, but the bilateral relationship has been bedevilled by a series of damaging trade rows ranging from steel and wine to solar panels."China is ready to work with the European Union to set out a comprehensive plan for the future of EU-China relations," China's Vice-Premier Ma Kai told a news conference alongside the EU's two most senior economics and trade officials.
"China is ready to ensure that our cooperation can be elevated to a higher level," Ma said after talks with the EU's economics chief Olli Rehn and EU Trade Commissioner Karel De Gucht in Brussels.
Saying he had come to send a "clear and positive signal" Ma, a one-time state planner promoted in China's new government this year, welcomed the start of negotiations with the European Union on November 21 at a summit in Beijing that will seek to remove restrictions on EU investment in China.
The European Union wants greater access to China in industries including banking and is eager for Beijing to drop requirements that Europeans must work with a Chinese joint venture partner and hand over sensitive know-how.
EU officials say the so-called investment pact is a fundamental test of China's willingness to compromise and play by rules set down by the World Trade Organisation that ban subsidising of companies to undercut foreign competitors

I choose this article again as it also highlights that China isn't actually this economic 'bad-boy' necessarily who will try to subvert other states to get it's own way- here it actually is backing down to EU pressure to open itself up to further investment, and play by the rules of the WTO. Something this again the articles author in the OP doesn't seem to take into account, by instead concentrating on a very tight and specific context.

Looking at that very tight and specific context though, i can't see the issue in reality in terms of the premise laid out in the 'Megarian Trap' i doubt the US would allow itself to be actively drawn into an economic conflict with China on Japan's behalf, especially as their are other alternatives to Chinese trade that Japan can and probably should look at pursuing to act as leverage against any Chinese economic threats made due to disputed territory. For instance again, much like the US- EU are pursuing a free trade agreement with each other, Japan could look to make more bilateral agreements with it's neighbors- India perhaps would make a good alternative.

Indeed just as i've said it and decided to research it, i find this!

Narendra Modi and Shinzo Abe are holding formal talks in Tokyo to cement a blossoming relationship between India and Japan cemented with a shared conservative agenda.Modi, who hopes his market-focused policies will boost India's floundering economy, could walk away with almost half a billion dollars' worth of loans for much-needed infrastructure projects, reports said.
The five-day visit – that began with a bear hug and a tour of Kyoto – is Modi's first trip outside the subcontinent and is intended to showcase the warming ties between Asia's second- and third-largest economies.
As well as a gamut of business deals that could lead to a doubling of Japanese direct investment, and the ¥50bn (£280m) in low-interest loans for new railways, highways and industrial parks, the summit will also strengthen diplomatic and defence ties.

http://www.theguardian.com/world/201...-nahendra-modi

So Asia's second and third largest economies are drifting (probably due to Chinese aggression in the region) together in mutual support, cementing links perhaps that could be followed up on the something quite beneficial. In this way, the whole idea of the 'Megarian Trap' is circumvented without the need for the US to be dragged into any such situation.

So i'd say it's less of a realistic threat, and more a highly subjective and very contextually narrow scenario that is more playing on the typical uncertainty over China's rise and fears of it in a role as world number 1 economy.

[hellheaven1987]

CCP the Swiss Cheese throws its weight against West? Haha may be they should hide their holes first.

[PikeStance]

@ Dante

I think you missed what he was driving at here. The issue isn't that China lacked alternatives it is that Japan over will have less alternatives. He argues:

By 2030, some economists believe, China could be 1.5 times the size of the U.S. economy and more than four times larger than the Japanese economy. According to the gravity model in trade economics, commercial exchange between two countries is dependent on their relative GDPs and the relative distance between them. This means that during peacetime, Japan and China could be expected to be each other’s largest trading partner. Even in 2012, when China’s GDP was still only about half as big again as that of Japan’s, bilateral trade was worth nearly $350 billion per annum. Given the likely widening of their relative GDP gaps to China’s benefit, Japan’s economy will be more dependent on China’s than vice versa. This creates the conditions for a “Megarian trap”; that is, China will have the ability – and thus the temptation – to wreak havoc on the Japanese economy with an economic embargo.

His argument is dependent on the gravity model bearing truth. Your argument that China will have alternative actually makes an embargo more likely, not less likely. The question if Japan will have alternative is highlighted by your last quote regarding trade talks with India. However, today's economic realities are harder to overcome than a possible more dependent future that could spell trouble for Japan.

[Dante Von Hespburg]

@ Dante

I think you missed what he was driving at here. The issue isn't that China lacked alternatives it is that Japan over will have less alternatives. He argues:


His argument is dependent on the gravity model bearing truth. Your argument that China will have alternative actually makes an embargo more likely, not less likely. The question if Japan will have alternative is highlighted by your last quote regarding trade talks with India. However, today's economic realities are harder to overcome than a possible more dependent future that could spell trouble for Japan.

My apologies if i wasn't clear- i was actually in the latter half pointing out that Japan itself has alternatives, that it is pursuing with India currently- they recently signed an agreement of closer economic and political cooperation in counter to China. What's again as i pointed out the article is very narrow in it's context. Since China won't be the worlds dominant economy as the author and model doesn't seem to take into account the EU as a unified economic body (Due to it probably not being a politically unified body). This means that China will have far less 'world-wide' clout even if it somehow supersedes the US as it's not actually 'Top-Dog'.

I was also actually pointing out that in fact China is MORE CONSTRAINED than the article makes out when you take into account the EU, and indeed the potential free-trade agreement between the EU and US, and also the closer cooperation between China and Japan. I'd perhaps argue indeed their not really going to be in a position to aggressively exploit and embargo states willy-nilly as their not the sole big player when we look beyond the narrow scope painted in said article.

[PikeStance]

My apologies if i wasn't clear- i was actually in the latter half pointing out that Japan itself has alternatives, that it is pursuing with India currently- they recently signed an agreement of closer economic and political cooperation in counter to China. What's again as i pointed out the article is very narrow in it's context. Since China won't be the worlds dominant economy as the author and model doesn't seem to take into account the EU as a unified economic body (Due to it probably not being a politically unified body). This means that China will have far less 'world-wide' clout even if it somehow supersedes the US as it's not actually 'Top-Dog'.

I was also actually pointing out that in fact China is MORE CONSTRAINED than the article makes out when you take into account the EU, and indeed the potential free-trade agreement between the EU and US, and also the closer cooperation between China and Japan. I'd perhaps argue indeed their not really going to be in a position to aggressively exploit and embargo states willy-nilly as their not the sole big player when we look beyond the narrow scope painted in said article.

You are still focusing on the wrong point (except part about Japan and India). If China is "top dog" then it is irrelevant to the points being made. It is discussing in relative term in relation to Japan and China. The EU is not discussed because unlike the US it has no military presence in the region. In other words, the EU is not Sparta. The US is (which could be the but of late night talk show jokes I am sure). Moreover, you discussing China and the EU where it would be more useful if the discussion was EU and Japan. However, this doesn't sit well with the gravity model discussed in the article. To date, you have not taken issue with that premise. Again, it isn't that China will be constrained, but if Japan will be in the future. The Key to discussion is Japan, not China. China's part has more to do with nationalism threatening a possible embargo in the future.

On related issue. China's recent aggressive behavior in the region has given Japan no shortages of potential trade partners (Philippines, Taiwan, Vietnam, and India). However, as I stated in the last response, the allure of China's potential as a trade partner may make it hard to convince Japanese businesses from dealing with other countries other than China regardless of the current geopolitical situation.

[Dante Von Hespburg]

You are still focusing on the wrong point (except part about Japan and India). If China is "top dog" then it is irrelevant to the points being made. It is discussing in relative term in relation to Japan and China. The EU is not discussed because unlike the US it has no military presence in the region. In other words, the EU is not Sparta. The US is (which could be the but of late night talk show jokes I am sure). Moreover, you discussing China and the EU where it would be more useful if the discussion was EU and Japan. However, this doesn't sit well with the gravity model discussed in the article. To date, you have not taken issue with that premise. Again, it isn't that China will be constrained, but if Japan will be in the future. The Key to discussion is Japan, not China. China's part has more to do with nationalism threatening a possible embargo in the future.

On related issue. China's recent aggressive behavior in the region has given Japan no shortages of potential trade partners (Philippines, Taiwan, Vietnam, and India). However, as I stated in the last response, the allure of China's potential as a trade partner may make it hard to convince Japanese businesses from dealing with other countries other than China regardless of the current geopolitical situation.

Don't worry i'll get to the gravity model when i have the time (alas have a mountain of uni work for Friday!). But the principle i'm dealing with is the premise of the article itself in the first place is far too narrow and unrealistic. Indeed the EU is not 'Sparta' (True about the US jokes ) But the fact of the matter is, neither is the US or anyone else. Military force is unnecessary in what we're talking about. China as 'top-dog' is highly improbable as said, since it's not truly 'top-dog' anyway due to the EU holding the economic cards which the article totally ignores- soft power, which as i've shown with China can be equally as effective in getting your message across. If military force is a fact, we're going into the realms of fantasy as i can't see China or indeed the US using any kind of military coercion of a significant escalation on each other, or indeed Japan (due to the threat of the US). Warfare just isn't on the cards.

But going back to what i said earlier, while you say that China isn't the key here, i'd say it very much is, if we expand the context (as i said, i take issue with the articles limited premise and subjective ignoring of important wider context) then a constrained China as i've said, would not be in any particular position to apply the pressure to Japan in the first place, as such arguably Japan would be perfectly fine with having such a large discrepency of trade with China (Though again it's unlikely this will be the case, as businesses invest where it's stable and returns are guaranteed- an aggressive China who's going through it's own economic structural issues, and will probably continue having to modernize and remain rather unstable is not an attractive foreign investment option at all- as such i'd very much say Japanese businesses will put their investment in elsewhere- the EU and US being two relatively 'safe' bodies in comparison to China, also India, the Philippines etc.

And this i guess is where i take issue with the Gravity model . Mostly because it's completely simplistic and unrealistic to real-market conditions. An aggressive China is unappealing to invest in, especially by those who have the most to lose in it's aggressive economic actions (Japan in this case). You have no guarantee of the protection of your investment, nor the returns- it's especially unattractive as you literally have India in the area who in the case of China acting like a dick, would be a far more worthwhile investment partner.

So my main points- the model is too simplistic, and so is the premise of the article- The author is merely trying to grasp at straws by subjectively twisting our current world economic and political realities to fit in the context of an historical incident with no regard for the bigger picture (Other actors like the EU, India, other current and future cooperative agreements, the actual Chinese economic situation in detail- it has large flaws currently, and is either stagnating, slowing, or booming too fast, and indeed the political realities and consequences for such an issue). The article ignores a lot, in favour of a very linear and specific set of events which are incredibly unlikely in the first place due to the wide variety of other factors and contexts which are purposely ignored to create the set of specific parameters for such a thing.

Basically- bad author

[hellheaven1987]

On related issue. China's recent aggressive behavior in the region has given Japan no shortages of potential trade partners (Philippines, Taiwan, Vietnam, and India). However, as I stated in the last response, the allure of China's potential as a trade partner may make it hard to convince Japanese businesses from dealing with other countries other than China regardless of the current geopolitical situation.

Yes, but then China also has very few options on hand; the reality is Sino-Japanese relation is no longer a regional matter only, as it indirectly connects to any of countries that are close to China. Any poor handling of dispute would more likely to push Chinese neighbours into opposite camp - sore of how Tsar Putin pushes whole East Europe to NATO now. Worse still, China is neither Sparta nor Athens - both have a network of solid alliance, kindly like Warsaw Pact vs NATO. China, on the other hand, has no such ally on international community, and its only "partner" is Tsar Putin the Opportunist who is also one that most eagerly to militarize the enemies of China now (means Vietnam and India here) - how much Russia can be trust is... very doubtful now (I bet Russia would just like Corinth that backstabbed anyone when it saw fit).

[PikeStance]

Don't worry i'll get to the gravity model when i have the time (alas have a mountain of uni work for Friday!). But the principle i'm dealing with is the premise of the article itself in the first place is far too narrow and unrealistic. Indeed the EU is not 'Sparta' (True about the US jokes ) But the fact of the matter is, neither is the US or anyone else. Military force is unnecessary in what we're talking about. China as 'top-dog' is highly improbable as said, since it's not truly 'top-dog' anyway due to the EU holding the economic cards which the article totally ignores- soft power, which as i've shown with China can be equally as effective in getting your message across. If military force is a fact, we're going into the realms of fantasy as i can't see China or indeed the US using any kind of military coercion of a significant escalation on each other, or indeed Japan (due to the threat of the US). Warfare just isn't on the cards

The the current state of things are not equivalent to the state of things between Athens, Megara, and Sparta. So yes, as things stand no, war is the farthest thing in anyone's minds.

But going back to what i said earlier, while you say that China isn't the key here, i'd say it very much is, if we expand the context (as i said, i take issue with the articles limited premise and subjective ignoring of important wider context) then a constrained China as i've said, would not be in any particular position to apply the pressure to Japan in the first place, as such arguably Japan would be perfectly fine with having such a large discrepency of trade with China (Though again it's unlikely this will be the case, as businesses invest where it's stable and returns are guaranteed- an aggressive China who's going through it's own economic structural issues, and will probably continue having to modernize and remain rather unstable is not an attractive foreign investment option at all- as such i'd very much say Japanese businesses will put their investment in elsewhere- the EU and US being two relatively 'safe' bodies in comparison to China, also India, the Philippines etc.

China needs foreign investment capital to feed is enlarging wealthy class. Moreover, economy is not all or nothing, Some sectors may be weak, but not all. China is politically stable country where economic investments are protected.

And this i guess is where i take issue with the Gravity model . Mostly because it's completely simplistic and unrealistic to real-market conditions. An aggressive China is unappealing to invest in, especially by those who have the most to lose in it's aggressive economic actions (Japan in this case). You have no guarantee of the protection of your investment, nor the returns- it's especially unattractive as you literally have India in the area who in the case of China acting like a dick, would be a far more worthwhile investment partner

From source are you basing this opinion on? As far as I know the issue nationalistic attitude of the local Chinese that creating an issue. It isn't fear the China is a big bully that is scaring investors away???? You seem to have fallen into the trap in believing politics over rules economics, where it is economics that dictate politics. The relationship between the US and Saudi Arabia is a good example of this.

So my main points- the model is too simplistic, and so is the premise of the article- The author is merely trying to grasp at straws by subjectively twisting our current world economic and political realities to fit in the context of an historical incident with no regard for the bigger picture (Other actors like the EU, India, other current and future cooperative agreements, the actual Chinese economic situation in detail- it has large flaws currently, and is either stagnating, slowing, or booming too fast, and indeed the political realities and consequences for such an issue). The article ignores a lot, in favour of a very linear and specific set of events which are incredibly unlikely in the first place due to the wide variety of other factors and contexts which are purposely ignored to create the set of specific parameters for such a thing.

How is it simplistic? Megara had no economic opportunity due to the Athenian embargo. Megara would had died an economic death. It had no alternative than to ask for help from its closest ally to help save it from ruin. If China continues its aggressive attitude and Japan increases its dependence with China (Gravity Model), then China would be in a position of enforcing an embargo to get Japan to capitulate to its demands. Japan, facing economic ruination, would have no choice but to go to war. The US by virtue of its alliance with Japan would be dragged into the conflict. The real question would be if China, unlike Athens, backs down from its demands. We would like to think we have evolve that the answer would be clear. However, China likes to fan flame of nationalism at the expense of Japan. Chinese government may not be in a position where it could back down. You also have a cultural issue of "saving face" that could also complicate things.

Yes, but then China also has very few options on hand; the reality is Sino-Japanese relation is no longer a regional matter only, as it indirectly connects to any of countries that are close to China. Any poor handling of dispute would more likely to push Chinese neighbours into opposite camp - sore of how Tsar Putin pushes whole East Europe to NATO now. Worse still, China is neither Sparta nor Athens - both have a network of solid alliance, kindly like Warsaw Pact vs NATO. China, on the other hand, has no such ally on international community, and its only "partner" is Tsar Putin the Opportunist who is also one that most eagerly to militarize the enemies of China now (means Vietnam and India here) - how much Russia can be trust is... very doubtful now (I bet Russia would just like Corinth that backstabbed anyone when it saw fit).

States act out of economic self- interest, not school house politics. The only real difference is that Russia and the EU would most likely not act like Persia. It is most likely that the EU and Russia would intervene to allow China to save face in the an event of such a crisis where Persia would had no such interest.

[hellheaven1987]

States act out of economic self- interest, not school house politics.

Really? May be I should ask British why they wanted to declare war on their second largest trade partner 100 years ago then (and to American, why you guys wanted to declare war on British Empire 200+ years ago; I have heard a few Chinese historians described American Revolution is a madness itself that completely ignored all economic sufferings and declaring war against greatest empire at that time).

[PikeStance]

Really? May be I should ask British why they wanted to declare war on their second largest trade partner 100 years ago then (and to American, why you guys wanted to declare war on British Empire 200+ years ago; I have heard a few Chinese historians described American Revolution is a madness itself that completely ignored all economic sufferings and declaring war against greatest empire at that time).

British Wars 100 Years ago: World War I? Should I assume the Boxer Rebellion in 1899? This wasn't an economic issue for Britain?
American Revolution: This was an economic war? This is a revelation! Please do tell!

ps... I wouldn't put too much stock in "Chinese" historians!

[Dante Von Hespburg]

[QUOTE=PikeStance;14145625
China needs foreign investment capital to feed is enlarging wealthy class. Moreover, economy is not all or nothing, Some sectors may be weak, but not all. China is politically stable country where economic investments are protected.
[/QUOTE]

http://www.theguardian.com/world/201...line-property-

Chinese manufacturing activity declined in December, piling pressure on communist leaders grappling with the slowest economic growth in the country since 1999, amid booming property prices and rising local government debts.

China now has that very First World problem of a housing/property bubble.

http://www.forbes.com/sites/kenrapoz...nues-to-falter

http://www.forbes.com/sites/gordonch...pse-has-begun/

http://www.afr.com/p/special_reports...rPO43xPhM34MVK

http://edition.cnn.com/2013/07/29/op...china-economy/

https://www.google.co.uk/url?sa=t&rc...,d.ZGU&cad=rja

As you can see my friend- China continuing to do well, or indeed decline is a very complex matter with both sides of the endless debate pointing towards varying economic incidents and trends. Indeed China actually has a very unstable economic base:

http://online.wsj.com/articles/SB1041976949216689224

It's growth was ironically too fast (and too artificially created) to be sustainable, it's much too reliant on world trade for that growth, it's not a high-tech producer or manufacturer and won't be for quite some time (indeed if ever it will be- currently China get's buy on poor quality rip-offs of more high-tech items when they do go 'home-grown' take their carriers and latest fighters. This doesn't look to change much considering the EU, US and co all have China under an arms embargo) Also China is potentially not going to be a politically stable country in the long term:

http://www.nytimes.com/2014/10/09/wo...ades.html?_r=0

http://www.unc.edu/depts/diplomat/AD...hina_pei.html- interesting article analysing the current prevelent though of China's decline- both politically and economically (Note- Decline is not Collapse, in the context we're speaking of, a Chinese Decline means basically their not now expected to meet the hype of a few years ago where they become the worlds number 1 superpower).

http://books.google.co.uk/books?id=G...stable&f=false

This to highlight my main political point though- China's political system WILL need to reform in the mid-term. You have a massive lower class who in the urban context are increasingly aware of the world (Students come to mind especially here), and who are seeing a large divide between the higher CCP 'in's' and themselves. You have massive wealth inequality, political tensions over the CCP not truly being representative anymore (in the long term). China is basically heading towards the way of democracy. There is a reason that the CCP leaders are starting to invest their assets in Chinese companies now, as they know the status quo of corrupt state officials (and China is all about that) can't last. Most of this awareness is due to the 'Social Media' revolution of course, as information now is nigh on impossible for states to truly control. Things always get through.

http://www.huffingtonpost.com/2013/1...n_4465529.html (Human right's issues are becoming a wider concern for people).

http://www.aljazeera.com/indepth/opi...820898636.html

Corruption in China is omnipresent, and it runs from top to bottom, or in Xi's words, from "tiger to fly". After the egalitarianism and violent political upheavals of the Mao era, former Chinese leader Deng Xiaoping put China on a course to economic modernisation, dubbing it a "socialist market economy". But this was just a euphemism for lawless state-controlled capitalism under an authoritarian one-party state. It produced 35 years of high economic growth without checks and balances, creating a free-for-all kleptocracy.

China faces a potentially turbulent decade of transition, both politically and economically. An increasingly highly educated urban middle class is no longer amenable to old-style communist authoritarianism. And neither is China's semi-advanced economy conducive to the old corrupt ways.

They've summed it up above more succinctly that i ever could. China is by no means a stable political and economic power, and unless effective and wide-scale reforms are taken (At a measured pace too) then an increasingly educated Chinese populace in the Urban centers will start calling for it.

From source are you basing this opinion on? As far as I know the issue nationalistic attitude of the local Chinese that creating an issue. It isn't fear the China is a big bully that is scaring investors away???? You seem to have fallen into the trap in believing politics over rules economics, where it is economics that dictate politics. The relationship between the US and Saudi Arabia is a good example of this.

You've misread what i've put down again my friend. I'll highlight it- 'An aggressive China is unappealing to invest in' - see it's about the scenario of the article- if China was to go down a very aggressive political and economic route- dominating other countries and generally being a bully with the threat of military force- then they'd be unappealing to invest in due to the coming economic and political instability. I didn't say they were currently like that. So we're talking here much like Russia currently who's economy already struggling is taking hit after hit (Even the threat of sanctions was enough for the Ruble to fall and Putin to have to start shuffling around the finances) and is only staying afloat due to Oil and Gas revenues.

How is it simplistic? Megara had no economic opportunity due to the Athenian embargo. Megara would had died an economic death. It had no alternative than to ask for help from its closest ally to help save it from ruin. If China continues its aggressive attitude and Japan increases its dependence with China (Gravity Model), then China would be in a position of enforcing an embargo to get Japan to capitulate to its demands. Japan, facing economic ruination, would have no choice but to go to war. The US by virtue of its alliance with Japan would be dragged into the conflict. The real question would be if China, unlike Athens, backs down from its demands. We would like to think we have evolve that the answer would be clear. However, China likes to fan flame of nationalism at the expense of Japan. Chinese government may not be in a position where it could back down. You also have a cultural issue of "saving face" that could also complicate things.

I feel we're trying to talk about two different things here. I've dismissed the article as simplistic because it doesn't outline a context for the entire global situation- all of which would be relevant (Japan and Indian cooperation increasing isn't explored, it assumes China does indeed become number 1 without the political instability which is quite clearly ahead of it, it assumes the US loses out and doesn't sign the free-trade agreement with the EU...and also it assumes that China IS number 1 and for some reason doesn't consider that the EU is and is set to be the worlds largest economic power- thus China can't have it all it's own way, especially as EU interests are increasingly looking towards Asia for economic ties and investment).

EDIT:

Again just to truly hammer this point home as it's a major one:

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/2/533a6374-1...#ixzz3FdgB8kuB

“China’s political model is just not sustainable because of the rising middle class – the same force that has driven democracy everywhere,” he says. “The new generation in China is very different from the one that left the land and drove the first wave of industrialisation – they’re much better educated and much richer and they have new demands, demands like clean air, clean water, safe food and other issues that can’t just be solved by fast economic growth.”
Estimates of the size of China’s middle class vary depending on the definition used but one thing is certain: it was virtually non-existent two decades ago and is now growing exponentially. The consultancy McKinsey says that what it calls the “upper middle class” – a segment of the population with annual household incomes of between $17,350 and $37,500 – accounted for 14 per cent of urban Chinese households last year but will account for 54 per cent of households in less than a decade.

http://www.ft.com/cms/s/2/533a6374-1...de.html#slide0

This is why China is not politically stable- and indeed why the scenario in the article is again simplistic- it's not taking into account any of the actual contexts that matter- i.e. It just assumes, despite evidence to the contray that China behaves as it does now, that the CCP continues to be undisputedly in charge, that the Chinese rising middle class stay as they are now (Which is highly unlikely as we're already seeing signs of discontent and a radical shake up of the CCP).

[PikeStance]

http://www.theguardian.com/world/201...line-property- China now has that very First World problem of a housing/property bubble.

As you can see my friend- China continuing to do well, or indeed decline is a very complex matter with both sides of the endless debate pointing towards varying economic incidents and trends. Indeed China actually has a very unstable economic base:

It's growth was ironically too fast (and too artificially created) to be sustainable, it's much too reliant on world trade for that growth, it's not a high-tech producer or manufacturer and won't be for quite some time (indeed if ever it will be- currently China get's buy on poor quality rip-offs of more high-tech items when they do go 'home-grown' take their carriers and latest fighters. This doesn't look to change much considering the EU, US and co all have China under an arms embargo) Also China is potentially not going to be a politically stable country in the long term:

interesting article analysing the current prevelent though of China's decline- both politically and economically (Note- Decline is not Collapse, in the context we're speaking of, a Chinese Decline means basically their not now expected to meet the hype of a few years ago where they become the worlds number 1 superpower).

There are two things for certain: 1 China could never maintain double digit economic growth indefinitely. 2. By consequence economists here and there will write articles aout the impending doom based on this decline. China in 2013 had a economic growth rate of 7.7. (http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG). In economics that is lightning fast growth.

I also stated the fact that some sectors of the economy is performing poorly this does not mean that the economy as a whole is poor. There is always section of the economy that struggles and other parts that strive. That is the very nature of economics.

It's growth was ironically too fast (and too artificially created) to be sustainable, it's much too reliant on world trade for that growth, it's not a high-tech producer or manufacturer and won't be for quite some time (indeed if ever it will be- currently China get's buy on poor quality rip-offs of more high-tech items when they do go 'home-grown' take their carriers and latest fighters. This doesn't look to change much considering the EU, US and co all have China under an arms embargo) Also China is potentially not going to be a politically stable country in the long term:

This is a myth that I keep reading all over the net in which I have to correct. China use to be producer of only cheap goods. This is NO LONGER the case. China does produce high tech goods. An obvious example is apple computers (specifically iPhones and iPAD). Moreover, they also produce electronics for non- Chinese companies. They also prodiuce computer and electronic parts for Ford Motor Comapny (my former ex-wife has a cousin who works as an engineer for the company). The 'rip off' industry is even more apparent within China than outside, as domestically people do not have the money to afford top of the line stuff. High fashion and electronic goods are more expensive here than in the US. So much more that many Chinese actually order online... which is cheaper than buying locally even when you factor in the shipping cost.

This to highlight my main political point though- China's political system WILL need to reform in the mid-term. You have a massive lower class who in the urban context are increasingly aware of the world (Students come to mind especially here), and who are seeing a large divide between the higher CCP 'in's' and themselves. You have massive wealth inequality, political tensions over the CCP not truly being representative anymore (in the long term). China is basically heading towards the way of democracy. There is a reason that the CCP leaders are starting to invest their assets in Chinese companies now, as they know the status quo of corrupt state officials (and China is all about that) can't last. Most of this awareness is due to the 'Social Media' revolution of course, as information now is nigh on impossible for states to truly control. Things always get through.

1 students are always more conscientious of what they have and what they want. This is in no way representative of people in China as a whole. We were here before back in 1989. The attitude of Chinese today about those events are very dismissive. Hardly the sort of attitude that would bring Change. Moreover, the Chinese political structure is STILL very non- democratic in nature. The National People's Congress have made some steps in having a real voice in determining policy, it is still just a "rubber stamp" of the CCP's directed policies. I do not see this changing anytime soon. One thing for sure the CCP is very conscientious of political turmoil; it is part of the reason, I believe, that they fan the flame of nationalism with the Japanese.

They've summed it up above more succinctly that i ever could. China is by no means a stable political and economic power, and unless effective and wide-scale reforms are taken (At a measured pace too) then an increasingly educated Chinese populace in the Urban centers will start calling for it.

I met a Chinese man who told me that Chinese use to be in communism, but now, we don't believe in much of anything. Personally, I think the political corruption cases are more or less for show. Most Chinese I have spoken seem to think it shows the government is really doing something about it. However, political corruption as always existed. It hasn't stopped anyone from investing in China to date, so I doubt it is hindrance now.

You've misread what i've put down again my friend. I'll highlight it- 'An aggressive China is unappealing to invest in' - see it's about the scenario of the article- if China was to go down a very aggressive political and economic route- dominating other countries and generally being a bully with the threat of military force- then they'd be unappealing to invest in due to the coming economic and political instability. I didn't say they were currently like that. So we're talking here much like Russia currently who's economy already struggling is taking hit after hit (Even the threat of sanctions was enough for the Ruble to fall and Putin to have to start shuffling around the finances) and is only staying afloat due to Oil and Gas revenues.

You are comparing apples to oranges. Russia took a hard stand against Europe. Russia is also dealing with a loss of prestige with the collapse of the Soviet Union. While it is true that China would like to reclaim its rights as the "Middle Kingdom" it has been a long time since China were in such a position. Moreover, China is much more attractive investment opportunity than Russia.

I feel we're trying to talk about two different things here. I've dismissed the article as simplistic because it doesn't outline a context for the entire global situation- all of which would be relevant (Japan and Indian cooperation increasing isn't explored, it assumes China does indeed become number 1 without the political instability which is quite clearly ahead of it,

Future political instability isn't clear except to you. A few doomsayers does truth not make. Is China's economy 100% healthy? No. Does China "prop up" failing Chinese businesses? Yes. Is China facing a catch 22 in regards to their goal of increasing their domestic consumption while maintaining a competitive edge in manufacturing? Yes. Does this mean that the CCP, which till now has been successful at forestalling any negative economic problems will suddenly lose their ability to manage their economy? I do not think so. Moreover, none of the economic "woes" you pointed out will scare away investors in sectors of the economy that is healthy. This, in a nutshell, is the main point of your argument. You have yet to demonstrate this will be a case.

....it assumes the US loses out and doesn't sign the free-trade agreement with the EU...and also it assumes that China IS number 1 and for some reason doesn't consider that the EU is and is set to be the worlds largest economic power- thus China can't have it all it's own way, especially as EU interests are increasingly looking towards Asia for economic ties and investment).

What does the US trade agreement with the EU have to do with the Megara Trap between Japan and China?
Yes again, you still missing the point. It has nothing to do with China trade agreements with other nations. Its about the economic dependence that will increase over time of Japan with China. Furthermore, the EU and the US could threaten an embargo themselves for Chinese aggression, but embargoes are notoriously bad for everyone. It would be an idle threat at best. Moreover, if the EU are that tied up with Chinese trade that such a threat could be made it will most likely be dependent on Chinese goods as much as US is now.

This is why China is not politically stable- and indeed why the scenario in the article is again simplistic- it's not taking into account any of the actual contexts that matter- i.e. It just assumes, despite evidence to the contray that China behaves as it does now, that the CCP continues to be undisputedly in charge, that the Chinese rising middle class stay as they are now (Which is highly unlikely as we're already seeing signs of discontent and a radical shake up of the CCP).

The GDP Per Capita Income is STILLwell below 10,000 even when adjusted for PPP. While there is a disparity between wealth in the certain Eastern Chinese cities, there is still a very small middle class in China. If there was a significant middle class then Chinese would be able to afford goods for "Western" consumption. China is over reliant on exports because they lack domestic consumption. This would not be the case if they had a large significant middle class. The irony is if they did, they would be financially content and unlikely to clamor for change. As example, look no further than UAE, which has a large middle/ upper class citzenry, and yet they have arguably less democratic institutions than China!

[Dante Von Hespburg]

There are two things for certain: 1 China could never maintain double digit economic growth indefinitely. 2. By consequence economists here and there will write articles aout the impending doom based on this decline. China in 2013 had a economic growth rate of 7.7. (http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG). In economics that is lightning fast growth.

I also stated the fact that some sectors of the economy is performing poorly this does not mean that the economy as a whole is poor. There is always section of the economy that struggles and other parts that strive. That is the very nature of economics.

Entirely agreed here- as i said a 'Chinese Decline' isn't actually the collapse of the states economy, but actually basically China doing just as well as the rest of us (and ergo not meeting the insane predictions of growth made a few years ago). This does though mean it's uncertain that China will take and hold the premier spot of world number one economy, especially as i've said the EU is in fact the worlds number one economy, and will remain so in the long term (even if China meets all growth targets).

Also as to your second point- again true- BUT your missing that fact that different sectors of the economy account for a different percent of it's entire make-up. So for instance

http://uk.reuters.com/article/2014/1...0HX04S20141008

The services sector made up 46.1 percent of gross domestic product in 2013, surpassing the secondary sector – manufacturing and construction – for the first time, as the government aims to create more jobs and boost domestic consumption.

China's services sector is one of it's main economic drivers. A crash or poor performance here (as the article points too- albeit in a slightly hyperbolic manner in terms of 'China is growing...just not as ridiculously fast as we all predicted it should') would have far reaching consequences and could initiate an economic recession (a'la UK recession style when our finance/services sector accounted for roughly 40 odd % of our total economy). As opposed to say a crash in China's mining sector which is currently more reliant on foreign imports for the process of it's modernization and so accounts for a far smaller overall percentage.

Interestingly of course property is the big one for China (and most other states indeed) in terms of overall economic performance- and here China, like many of us is having to cope with the mid-term issue of a housing bubble.

1 students are always more conscientious of what they have and what they want. This is in no way representative of people in China as a whole. We were here before back in 1989. The attitude of Chinese today about those events are very dismissive. Hardly the sort of attitude that would bring Change. Moreover, the Chinese political structure is STILL very non- democratic in nature. The National People's Congress have made some steps in having a real voice in determining policy, it is still just a "rubber stamp" of the CCP's directed policies. I do not see this changing anytime soon. One thing for sure the CCP is very conscientious of political turmoil; it is part of the reason, I believe, that they fan the flame of nationalism with the Japanese.

Again i do agree here, but we're still looking at the mid-long term, which as you rightly point out the CCP are playing the 'external threat- nationalist unite' card to delay, that of wide scale social, political and economic emancipation (to use a loaded word) of your average Chinese person.

I met a Chinese man who told me that Chinese use to be in communism, but now, we don't believe in much of anything. Personally, I think the political corruption cases are more or less for show. Most Chinese I have spoken seem to think it shows the government is really doing something about it. However, political corruption as always existed. It hasn't stopped anyone from investing in China to date, so I doubt it is hindrance now.

While perhaps not stopping foreign investment overtly, it does though of course have an impact on it. Corruption as in many cases of siphoning off that investment capital into private accounts, or diverting public funds naturally puts some measure of constraint upon overall economic growth. I do agree that probably much of the current government counter to this is less an effective measure of curtailing corruption and more a reassurance to the populace of action being taken.

You are comparing apples to oranges. Russia took a hard stand against Europe. Russia is also dealing with a loss of prestige with the collapse of the Soviet Union. While it is true that China would like to reclaim its rights as the "Middle Kingdom" it has been a long time since China were in such a position. Moreover, China is much more attractive investment opportunity than Russia.

I'd perhaps point out that China currently is indeed a more attractive investment opportunity in comparison to Russia...being down to Russia's current political actions. Before this Russia wasn't exactly a poor option a few years ago to invest in. indeed ironically 2014 was supposed to be the year of UK-Russia co-operation in developing Russia's economy and helping out Putin with his modernization reforms in return for closer co-operation and investment opportunities for both sides..sweet irony! (Much like China is currently doing in terms of reform and modernization, so i believe a fair comparison- a state going through a period of social and economic change than in the mid term will facilitate political change too).

Russia and the Ukraine/Crimea issue is also similar to China in a way with it's 'sovereign' territorial claims to various islands- Only in this case China was sensible enough to not go full Putin to shore up domestic support (Sanctions and Putin's actions in essence have secured and shored up his oligarchical regime by giving Russians a very easy West vs East issue again to concentrate on,where as before their was increasing dis-satisfaction with the Putin regime arguably- whether or course this will come to anything i can't say). China and Russia are very similar actors- though their economic 'smarts' are what that sets them apart.

Future political instability isn't clear except to you. A few doomsayers does truth not make. Is China's economy 100% healthy? No. Does China "prop up" failing Chinese businesses? Yes. Is China facing a catch 22 in regards to their goal of increasing their domestic consumption while maintaining a competitive edge in manufacturing? Yes. Does this mean that the CCP, which till now has been successful at forestalling any negative economic problems will suddenly lose their ability to manage their economy? I do not think so. Moreover, none of the economic "woes" you pointed out will scare away investors in sectors of the economy that is healthy. This, in a nutshell, is the main point of your argument. You have yet to demonstrate this will be a case.

I don't know here, again i'm not purporting a Chinese collapse by any means- merely pointing out that it's an unknown as to whether they'll 'take and hold' that top spot in the global economy, especially with upcoming actors like India, and a closer knit EU (If they manage to get their act together- though again as i said the EU is increasingly it's presence in the pacific).

Also it's very important to remember that economic sectors are not in a vacuum to each other- if one major sectors starts struggling there is a knock-on effect to other areas- hence how the global recession in the UK got so bad (and indeed how we recovered so fast compared to the rest of the G7). As such a failing service or manufacturing sector WILL put off foreign investment as it begins to devalue other areas of the Chinese economy- and let's not even talk about property an inflation. The economy of a state is a very intricate and fragile thing- heck the mere threat/rumor that a sector isn't doing so well/might be heading for a down turn is enough to make it a reality as investors lose their nerve and bail on it (Much like the Russian economy started taking hits even before sanctions were implemented)- The economy is all about 'confidence' this belief has an affect on it's actual productivity. It's actually a crappy thing, and why the world economy keeps taking severe hits over decade or so.

What does the US trade agreement with the EU have to do with the Megara Trap between Japan and China?
Yes again, you still missing the point. It has nothing to do with China trade agreements with other nations. Its about the economic dependence that will increase over time of Japan with China. Furthermore, the EU and the US could threaten an embargo themselves for Chinese aggression, but embargoes are notoriously bad for everyone. It would be an idle threat at best. Moreover, if the EU are that tied up with Chinese trade that such a threat could be made it will most likely be dependent on Chinese goods as much as US is now.

I'm trying to paint the actual picture beyond the vacuum context of the article. These all as i've said have a knock on effect to how the article (falsely) paints how the scenario will play out- since it doesn't take into account any wider context.

A combined EU-US free trade zone would make both powers (if you deign of course to call the EU in it's current form a political power, and not just an economic one, though it does undeniably have large scale political influence world-wide, just of the 'soft' economic variety, which perhaps is the way the future of power will be decided given current trends) an incredibly frighteningly (to get slightly hyperbolic) economic powerhouse (more so than now) and would prevent China taking it's top spot, as it would be in no position to aggressively embargo the Japanese (regardless of their dependency) due to it's largest trade partner (the EU) and second/third largest (the US) typically are moving towards greater co-operation and could seriously put the plug in on the Chinese economy.

The rise of India, Malay and Brazil, also mean that EU/US reliance of Chinese cheap goods shifts towards one of these states- lessening the influence China would have over the EU-US. SA you rightly pointed out, China's strength in it's cheap manufacturing will be lost ironically as it advances and moves into higher tech manufacturing. especially as India comes up and undercuts Chinese labour. As such from the get go here, the US avoids falling into the 'trap' of having to exert military pressure, by the grace of working within the international community and bringing China to heel through counter-economic means arguably.

Then when talking about Japan here of course, Japan doesn't actually have to pursue greater trade dependency with China, indeed it's starting to explore the closer co-operation with India (the next rising star, a population as large as China, raw materials and resources also as available as in China, but with a more democratic/Western government and one that is happy to work within international norms...for everything BUT Pakistan...).

The GDP Per Capita Income is STILLwell below 10,000 even when adjusted for PPP. While there is a disparity between wealth in the certain Eastern Chinese cities, there is still a very small middle class in China. If there was a significant middle class then Chinese would be able to afford goods for "Western" consumption. China is over reliant on exports because they lack domestic consumption. This would not be the case if they had a large significant middle class. The irony is if they did, they would be financially content and unlikely to clamor for change. As example, look no further than UAE, which has a large middle/ upper class citzenry, and yet they have arguably less democratic institutions than China!

Again i can see your point here, but i'm not sure i can agree with any certainty. A large and significant middle class would surely wish for greater enfranchisement in the system as we've seen historically with word powers? the UAE is an interesting case due to divergent cultural influence i believe. But again that's just how i view it, i could be wrong.

[PikeStance]

I'm trying to paint the actual picture beyond the vacuum context of the article. These all as i've said have a knock on effect to how the article (falsely) paints how the scenario will play out- since it doesn't take into account any wider context.

The point of the article is the risk of enforcing an embargo against a state that would have no alternative but to go to war in order to secure its own economic survivability. You brought up completely irrelevant points that has only clouded the hypothesis.
Let’s for fun, examine some of these suppositions.

Entirely agreed here- as i said a 'Chinese Decline' isn't actually the collapse of the states economy, but actually basically China doing just as well as the rest of us (and ergo not meeting the insane predictions of growth made a few years ago). This does though mean it's uncertain that China will take and hold the premier spot of world number one economy, especially as i've said the EU is in fact the worlds number one economy, and will remain so in the long term (even if China meets all growth targets).
….I don't know here, again I’m not purporting a Chinese collapse by any means- merely pointing out that it's an unknown as to whether they'll 'take and hold' that top spot in the global economy, especially with upcoming actors like India, and a closer knit EU (If they manage to get their act together- though again as i said the EU is increasingly its presence in the pacific).

What do you mean by "just as well as the rest of us" It still a fast growth rate consistent with most "developing" economies?
Both you and most laymen are putting too much stock in GDP. It is only meaningful when you consider other factors. The article argument with GDP was very specific. It dealt with the relationship between Japan and China. Here is the relevant portion:

According to the gravity model in trade economics, commercial exchange between two countries is dependent on their relative GDPs and the relative distance between them. This means that during peacetime, Japan and China could be expected to be each other’s largest trading partner. Even in 2012, when China’s GDP was still only about half as big again as that of Japan’s, bilateral trade was worth nearly $350 billion per annum. Given the likely widening of their relative GDP gaps to China’s benefit, Japan’s economy will be more dependent on China’s than vice versa.

So if you could suspend with this nonsense that “China won’t be the top dog” talk, I would appreciate it. It has NOTHING to do with the argument in the article and I couldn’t care less either. It is not germane to the discussion.

Also as to your second point- again true- BUT your missing that fact that different sectors of the economy account for a different percent of its entire make-up. So for instance

China's services sector is one of its main economic drivers. A crash or poor performance here (as the article points too- albeit in a slightly hyperbolic manner in terms of 'China is growing...just not as ridiculously fast as we all predicted it should') would have far reaching consequences and could initiate an economic recession (a'la UK recession style when our finance/services sector accounted for roughly 40 odd % of our total economy). As opposed to say a crash in China's mining sector which is currently more reliant on foreign imports for the process of it's modernization and so accounts for a far smaller overall percentage.

Interestingly of course property is the big one for China (and most other states indeed) in terms of overall economic performance- and here China, like many of us is having to cope with the mid-term issue of a housing bubble.
Also it's very important to remember that economic sectors are not in a vacuum to each other- if one major sectors starts struggling there is a knock-on effect to other areas- hence how the global recession in the UK got so bad (and indeed how we recovered so fast compared to the rest of the G7). As such a failing service or manufacturing sector WILL put off foreign investment as it begins to devalue other areas of the Chinese economy- and let's not even talk about property an inflation. The economy of a state is a very intricate and fragile thing- heck the mere threat/rumor that a sector isn't doing so well/might be heading for a down turn is enough to make it a reality as investors lose their nerve and bail on it (Much like the Russian economy started taking hits even before sanctions were implemented)- The economy is all about 'confidence' this belief has an effect on its actual productivity. It's actually a crappy thing, and why the world economy keeps taking severe hits over decade or so.

I am curious how much of the article that you read?
Here are some important points in the article

A sub-index measuring new business fell to 53.2 in September from a 19-month high of 53.9 in August, but sub-indexes measuring employment and outstanding business[IMG]file:///C:\Users\User\AppData\Local\Temp\msohtmlclip1\01\clip_image001.png[/IMG] both inched up, painting a mixed picture.
"Overall, the services sector held up in September, despite the downward pressure seen in the manufacturing sector. We think risks to growth in the near term are still on the downside, and warrant accommodative monetary as well as fiscal policies," said Qu Hongbin, chief China economist at HSBC.
The services sector made up 46.1 percent of gross domestic product in 2013, surpassing the secondary sector – manufacturing and construction – for the first time, as the government aims to create more jobs and boost domestic consumption.
Analysts expect more policy measures will be needed to help achieve the government's growth target of around 7.5 percent this year, although any dramatic stimulus looks unlikely as reform-minded top leaders have shown greater tolerance for slower growth.

I never stated that sectors operate in a vacuum. What I stated that when one sector is “ill” it doesn’t mean there aren’t healthy parts to the economy. I am not sure why you took this mean that I believed they act in a bubble. Moreover, the fact that some sectors can affect other sectors doesn’t mean the whole system is too sick for investors to invest in.
Plus the article stated and I have written in other threads about China that China will continue to experience slower economic growth as the government will continue to try to boost domestic consumption. If anything, this would most likely entice Japanese investors not repel them. China will be hungry for capital from foreign investors to help increase economic growth in the future. It is also a false assumption to think that a “recession” would be a deterrent for investors. Government policy would be aim at enticing foreign influx of capital to help the sluggish economy to recover.
Here is an example from your article

In a bid to avert a deeper slide in the housing market, China's central bank and banking regulator relaxed lending rules for second-home buyers on Sept. 30 by giving them a 30 percent discount on mortgage rates and cutting their down payment levels to 30 percent from 60-70 percent.
"We think the easing lending condition is more impactful compared with unwinding of previous housing purchase restrictions. As such, we expect the systemic risk arising from property sector to be contained," OCBC said in a research note on Wednesday.

---

Again i do agree here, but we're still looking at the mid-long term, which as you rightly point out the CCP are playing the 'external threat- nationalist unite' card to delay, that of wide scale social, political and economic emancipation (to use a loaded word) of your average Chinese person.

I can only think that you are speculating this because of your own preconceived notions of what you think how a government should function. China has NO history of a democracy or representative government. It has always had an authoritarian style government. When I taught American government as part of the American program in a Chinese school, I taught the bill of rights. The entire notion were completely foreign to them. In some cases, they were shocked by what US citizens expected/ demanded from its government. Even if the CCP would fail and even if a new government would replace it, I would not expect it to be any more democratic than it is now. Anyway, since this isn’t imminent, it is hardly germane to the topic.

While perhaps not stopping foreign investment overtly, it does though of course have an impact on it. Corruption as in many cases of siphoning off that investment capital into private accounts, or diverting public funds naturally puts some measure of constraint upon overall economic growth

You write this as if China’s corruption is somehow unique to other government corruption that exist in the world. Let’s be honest, it is hardly the kleptocracies that exist in Africa.

Russia and the Ukraine/Crimea issue is also similar to China in a way with its 'sovereign' territorial claims to various islands- Only in this case China was sensible enough to not go full Putin to shore up domestic support (Sanctions and Putin's actions in essence have secured and shored up his oligarchical regime by giving Russians a very easy West vs East issue again to concentrate on, whereas before there was increasing dis-satisfaction with the Putin regime arguably- whether or course this will come to anything i can't say). China and Russia are very similar actors- though their economic 'smarts' are what that sets them apart.

You are comparing apples to oranges here. I already dealt with this wild goose chase in the last response. I see nothing new here to respond to.

A combined EU-US free trade zone would make both powers (if you deign of course to call the EU in its current form a political power, and not just an economic one, though it does undeniably have large scale political influence world-wide, just of the 'soft' economic variety, which perhaps is the way the future of power will be decided given current trends) an incredibly frighteningly (to get slightly hyperbolic) economic powerhouse (more so than now) and would prevent China taking its top spot, as it would be in no position to aggressively embargo the Japanese (regardless of their dependency) due to its largest trade partner (the EU) and second/third largest (the US) typically are moving towards greater co-operation and could seriously put the plug in on the Chinese economy.

The EU- US trade agreement has NOTHING to do with the China- Japan relationship! I responded to this in the last response…. This reads like a rehashing of the same points you made last time.

The rise of India, Malay and Brazil, also mean that EU/US reliance of Chinese cheap goods shifts towards one of these states- lessening the influence China would have over the EU-US. SA you rightly pointed out, China's strength in its cheap manufacturing will be lost ironically as it advances and moves into higher tech manufacturing especially as India comes up and undercuts Chinese labor. As such from the get go here, the US avoids falling into the 'trap' of having to exert military pressure, by the grace of working within the international community and bringing China to heel through counter-economic means arguably.

The ‘trap’ refers to China and Japan. The US only plays a supporting role in the trap. I dealt with this in the last response. I suggest you re- read and if you have any issue with my arguments you can respond to them in your next response.

Then when talking about Japan here of course, Japan doesn't actually have to pursue greater trade dependency with China, indeed it's starting to explore the closer co-operation with India (the next rising star, a population as large as China, raw materials and resources also as available as in China, but with a more democratic/Western government and one that is happy to work within international norms...for everything BUT Pakistan...) .

Exploring trade agreements with other countries doesn’t necessarily mean that businesses would abandoned investment opportunities that they already have. If China (according to the model) present a better investment that is where the money will go. They would not care if the government is similar or not. It is about incentives. If the incentives are more attractive then that would bring more money. China’s proximity makes India a less likely replacement.

Not just India but also towards SEA; Japan actually is pursuing a multiple direction investment to avoid relying on one region too much. The good thing is SEA, also deeply suspicious towards Chinese, find Japanese a better alternation as a fund source, not to mention Japan has a more deeper political tie with SEA (interesting Japan actually involved quite heavily in SEA even during Cold War).

This is actually incredibly interesting, i was unaware just how much China's antagonism is working against its own interests basically in South East Asia. So in essence we're seeing an isolated China, if it continues down its current path being rather left out in the cold? It's why their current burst of nationalist rhetoric over formerly 'claimed' lands, is so confusing from my perspective, since it's so counter-productive in the long run for what China wants- that is a stable and extensive modern economy that allows it to wield respect and influence within the region- influence is pretty useless if everyone is slowly getting together against you.

Do not confused government chest pumping with the motivation that drives businesses to invest!

[Dante Von Hespburg]

The point of the article is the risk of enforcing an embargo against a state that would have no alternative but to go to war in order to secure its own economic survivability. You brought up completely irrelevant points that has only clouded the hypothesis.
Let’s for fun, examine some of these suppositions.


What do you mean by "just as well as the rest of us" It still a fast growth rate consistent with most "developing" economies?
Both you and most laymen are putting too much stock in GDP. It is only meaningful when you consider other factors. The article argument with GDP was very specific. It dealt with the relationship between Japan and China. Here is the relevant portion:

So if you could suspend with this nonsense that “China won’t be the top dog” talk, I would appreciate it. It has NOTHING to do with the argument in the article and I couldn’t care less either. It is not germane to the discussion.


I am curious how much of the article that you read?
Here are some important points in the article

I never stated that sectors operate in a vacuum. What I stated that when one sector is “ill” it doesn’t mean there aren’t healthy parts to the economy. I am not sure why you took this mean that I believed they act in a bubble. Moreover, the fact that some sectors can affect other sectors doesn’t mean the whole system is too sick for investors to invest in.
Plus the article stated and I have written in other threads about China that China will continue to experience slower economic growth as the government will continue to try to boost domestic consumption. If anything, this would most likely entice Japanese investors not repel them. China will be hungry for capital from foreign investors to help increase economic growth in the future. It is also a false assumption to think that a “recession” would be a deterrent for investors. Government policy would be aim at enticing foreign influx of capital to help the sluggish economy to recover.
Here is an example from your article

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I can only think that you are speculating this because of your own preconceived notions of what you think how a government should function. China has NO history of a democracy or representative government. It has always had an authoritarian style government. When I taught American government as part of the American program in a Chinese school, I taught the bill of rights. The entire notion were completely foreign to them. In some cases, they were shocked by what US citizens expected/ demanded from its government. Even if the CCP would fail and even if a new government would replace it, I would not expect it to be any more democratic than it is now. Anyway, since this isn’t imminent, it is hardly germane to the topic.


You write this as if China’s corruption is somehow unique to other government corruption that exist in the world. Let’s be honest, it is hardly the kleptocracies that exist in Africa.


You are comparing apples to oranges here. I already dealt with this wild goose chase in the last response. I see nothing new here to respond to.


The EU- US trade agreement has NOTHING to do with the China- Japan relationship! I responded to this in the last response…. This reads like a rehashing of the same points you made last time.

The ‘trap’ refers to China and Japan. The US only plays a supporting role in the trap. I dealt with this in the last response. I suggest you re- read and if you have any issue with my arguments you can respond to them in your next response.

Exploring trade agreements with other countries doesn’t necessarily mean that businesses would abandoned investment opportunities that they already have. If China (according to the model) present a better investment that is where the money will go. They would not care if the government is similar or not. It is about incentives. If the incentives are more attractive then that would bring more money. China’s proximity makes India a less likely replacement.




Do not confused government chest pumping with the motivation that drives businesses to invest!

I'm on holiday for the week my friend, so can't make an extensive reply here till next week monday there abouts (just to be polite and let you know i'm not ignoring you!)

But something i've noticed is we're basically having two different discussions. Did you want to discuss the scenario in the article specifically with your op? Or can we discuss the article itself- it's probability of happening and thus wider context?

As i'm trying to do the latter (Since i don't see the article as being remotely realistic as i've said), and you give the impression of wishing to do the former? Which is fine, but i just want to clear this up.

Also a small point of economics- stability (Thus political policy) is integral to economic investment, as i've sourced and shown. If you have a government making waves internationally, you lower confidence of investors and thus lose out on potential investment.

Now as you said, it might not drive existing investors away...but what it will do is put of future investors, especially when the current Pacific economy as a whole has plenty of other opportunities up and coming as myself and Hellheaven have shown. Future investment is what's important here, and that's what a China who is politically throwing it's weight around will lose.

Again it's all very well saying that economy doesn't follow stability/politics, but you also have to remember even recent precedence that a turbulent political environment makes for a poor economic viability.

Take the impact of the Scottish Referendum on the UK economy and the £ itself!

When it remotely looked like we'd go independent, the pound drop rather massively, very fast.

When it came out this information was exaggerated it soared back up, and so did investment. I'd highly recommend you take a look at it as a case study as it's very much a great way of showing how a countries political situation affects investment and indeed it's economy in a huge way.