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There will be a Russia-like situation with China within the year and the economic impact will be 10x 😐 I’d guess an open economic war rather than movement on Taiwan though.
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And hard to prepare. You can hoard China-sourced supplies to a bit as a consumer, but the economic entanglement is extremely deep. We got a preview during Covid supply shocks when all sides were desperately trying to *solve* the problem. Imagine if they’re trying to *create* it.
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Russia is also a preview. They have *one* big bargaining chip — oil and gas. China has a thousand small bargaining chips that add up to like 3x oil-and-gas probably. Biden hitting them on semiconductors feels like using up biggest economic options early, like shock-and-awe.
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I’m frankly surprised the Biden admin moved this fast and this aggressively. Coupled with a spike in deep media coverage of Xi’s consolidation, 3rd term, purges, etc. I think they know something we don’t. This is possibly a preemptive economic strike due to intelligence info?
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The general view in IR world in the last few decades as I understand it has been that time/waiting favors China because US weakens slowly due to demographics. I think this is no longer true. China is aging too, and it’s economic model feels like a ticking Mindel-Fleming time bomb
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My best guess on what’s triggered movement in China is a combination of: 1. Economic downturn/deleveraging cycle brewing since pre-pandemic 2. Covid control PTSD 3. New writing on wall since Ukraine re window for geopolitical aims
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Replying to
👀 til about currency forwards
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1/3 "A source noted that the state banks' trades appeared to be managed so that the country's closely-watched $3 trillion foreign exchange reserves will not be tapped for intervention." reuters.com/business/energ
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There was fear of decline in all the major players in the lead up to WW1. France and the UK feared decline relative to Germany, Germany to Russia and Russia feared it would fall behind technologically and become a new China.
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