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China geopolitics north korea populism

Of Rocket Men, Chinese Hegemony, And Populism Run Amok: 3 Visual Guides

You wouldn't know it from looking at any market-based measures of volatility, but 2017 was a hugely consequential year. I assume that goes without saying. 

You wouldn’t know it from looking at any market-based measures of volatility, but 2017 was a hugely consequential year. I assume that goes without saying.

Most of the drama and accompanying uncertainty emanated from the geopolitical realm where, on the heels of the 2016 Brexit referendum, the Western world continued to stumble aimlessly towards a brand a populism that, while new in some ways, shares much with elder vintages.

Meanwhile, as Western democracies attempted to defend the institutions that define them in the face of the nationalist message being foist upon the electorate by false prophets seeking to bolster their own political capital by playing on the fears of the disaffected, China seized on the opportunity to take the reins. It didn’t hurt that the opportunity presented itself during the same year as the The 19th Party Congress, that found Xi consolidating power.

 

The irony there shouldn’t be lost on you: as the U.S. sought to turn back the clock in an ill-fated effort to reclaim lost “greatness” (whatever that exceedingly and intentionally amorphous term means to you), Xi Jinping stepped in to serve as an anchor in a sea of geopolitical tumult. Thus, there’s a sense in which Donald Trump has accomplished exactly the opposite of the message he pushed on the campaign trail. He has accelerated China’s push towards global hegemony. Trump’s brand of populism implicitly promised to restore unipolarity in the world with the U.S. at the helm. Instead, he has virtually ensured that within two decades, China will preside over a unipolar world with the U.S. relegated to also-ran status.

Playing out against this backdrop was the drama on the Korean peninsula where the regime in Pyongyang also capitalized politically off Trump’s incompetence. Trump’s shrill rhetoric effectively transformed the myth of an epic struggle between Pyongyang and Washington into a reality. That myth is the cornerstone on which the Kim family’s hold on power is built. The more real it becomes, the stronger their grip. In a testament to the contention that Trump is actually doing more to escalate tensions than Kim, Goldman recently found that if what you’re looking to for signs of heightened tension is the VIX, it’s Trump’s tweets that matter – not actual missile tests in North Korea:

GSTrumpVIX

Well speaking of Goldman, they’re out with the year-end installment of their “Top Of Mind” series and it touches on all of the above. Below, find three visual guides and accompanying color that speak to the rise of populism in Europe, China, and North Korea.

Via Goldman

The Euro area’s most immediate political risks—i.e., populist or euroskeptic parties winning key elections this year— did not materialize. However, these movements continued to gain traction.

  • In the Dutch elections in March, the far-right Party for Freedom performed worse than polls had once predicted, but still increased its share of the vote relative to the 2012 elections. It remains the second-largest party in parliament.
  • In France, concerns about the prospect of Marine Le Pen winning the presidency gave way to optimism over Emmanuel Macron’s reform agenda; nonetheless, Le Pen posted the best-ever showing for her party in a presidential race.
  • In Germany, Chancellor Angela Merkel’s CDU-CSU retained the largest number of seats in the Bundestag, but the far-right Alternative für Deutschland (AfD) entered it for the first time with 13% of the vote.
  • And elsewhere in Europe, populist parties on various parts of the political spectrum performed well enough to participate in government coalitions; indeed, an anti-establishment candidate in the Czech Republic recently became prime minister.

Populism

Tensions have increased further between the US and North Korea. Since we published in May, hostile rhetoric between Donald Trump and Kim Jong-un has escalated: Kim Jong-un referred to Trump as a “dotard” (a very old person), and Trump responded by effectively calling Kim Jong-un “short and fat.” Both sides have followed words with action:

  • North Korea has continued to test nuclear weapons and longer-range missiles. In September, North Korea conducted its sixth nuclear test—the most powerful yet. More recently, in late November, Pyongyang launched an intercontinental ballistic missile (ICBM) that traveled “higher… than any previous shot they’ve taken,” according to US Defense Secretary James Mattis. According to the Center for Strategic and International Studies, this marked the 18th North Korean military provocation in 2017. Based on the test, some experts speculate that Pyongyang may now have missiles capable of reaching anywhere in the continental US, although whether North Korea has the ability to successfully attach a warhead to such missiles is unknown.
  • The US has stepped up sanctions alongside the international community, among other actions. Washington has continued to ramp up financial sanctions, and recently re-designated North Korea a state sponsor of terror. China has also signaled its intent to participate in a new international sanctions regime adopted by the UN Security Council in September. Lastly, the US and South Korea recently engaged in large-scale military exercises on the Korean Peninsula, although South Korea has asked the US to agree to postpone spring exercises until after the winter Olympic Games in Pyeongchang.
  • Meanwhile, China has continued to push its “freeze for freeze” proposal, which entails North Korea freezing its nuclear program in exchange for the US and South Korea halting military exercises in the region (the US continues to reject this idea). And China has also pursued a warming in relations with South Korean President Moon Jae-in, who is visiting China this month.

NorthKorea

The 19th Party Congress fortified Xi Jinping’s grasp on power. Officially, the Chinese president retained his post as the Chinese Communist Party’s (CCP) general secretary and chairman of the Central Military Commission (CMC). However, signs of Xi’s influence extended past official titles. For instance, Xi’s political philosophy (i.e., “Xi Jinping Thought”) was enshrined in the party’s constitution. Only one Chinese leader has been bestowed with such an honor: Mao Zedong.

  • Despite turnover, the new leadership lineup brought few surprises. Five new men joined China’s foremost political body, the seven-member Politburo Standing Committee (PSC). Aside from Xi, Prime Minister Li Keqiang was the only leader to retain his seat. Prior to the Congress, China experts outlined a number of potential changes to the PSC (e.g., a shift from seven to five members, the re-appointment of leaders who had surpassed the traditional retirement age, etc.). But, in the end, precedent held and political institutions were left largely untouched, including the practice of appointing some officials from opposing factions.
  • Xi may be paving the way to stay in power beyond two terms. CCP leadership did not appoint a clear successor to Xi—a departure from the conventional practice that had been in place since 1990s. As such, some external experts have suggested that Xi’s tenure may continue for some time; in the words of one of our interviewees, Professor Willy Lam of the Chinese University of Hong Kong, Xi “is likely to remain supreme leader for at least fifteen years, until the 21st Party Congress in 2027.”
  • The direction of policy change following the Party Congress is clear; the speed and effectiveness of it is not. Chinese leaders signaled in the Party Congress as well as in the recently concluded Politburo meeting that sets the economic agenda for the coming year that they will focus on economic sustainability, reducing inequality, and risk control relative to top-line growth. However, with several new economic policymakers taking office in the coming months—as well as the overhang from the leverage growth over the past decade—policy calibration remains unclear.

China

 

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7 comments on “Of Rocket Men, Chinese Hegemony, And Populism Run Amok: 3 Visual Guides

  1. Perspectives on the world rarely include competent examinations of the economic limitations of critical finite resources (resources necessary for basic living standards that can be depleted, diluted and or can’t be recycled fast and efficiently enough to offset their consumption rates) and in turn their limitations on geopolitics. Assumptions that China will dominate the world economically for any sustained period – without the acquiescence of that world are short sighted.

    China’s population is its biggest asset and its biggest problem for economic domination of the world. China is burning through its finite critical resources (FCR) due to excessive population and massive export economy – faster than any other developed economy. It’s future existence depends entirely on being able to acquire FCRs from the rest of the world in trade, through extortion, and or military force. Extortion has a way of backfiring and has historic low economic efficiency. Military force is even more economically inefficient in the nuclear retaliation age.

    China has recognized the burden of its overpopulation since since 1979 when one of Mao’s advisors Song Jian convinced Mao that continuing to expand China’s population as a military strategy was not cost effective in terms of resource usage . It’s One Child Policy was established in 1980, evolved, but was not effective in reducing its population. However, it should be pointed out that the One Child Policy is estimated to have been poorly enforced (many ethnic groups, wealthy and party members were exempted) and some experts say in reality impacted only 30% of the Chinese population. (https://en.wikipedia.org/wiki/One-child_policy#Unequal_enforcement).

    China’s recognition of its population burden also included the recognition of what opportunities that a massive population can create. That primary opportunity is colonization ability. Such colonization does not have to be a formal declaration, but can be established economically as it has been in Africa, South America, and other less developed parts of the world by Chinese land buyers (farmers, miners and immigrants) – all working openly or secretively – for the greater good of China. The strategy behind this economic colonization is simple. It expands the FCR supply base (starting with food and raw mfg. materials) for the benefit China, its national economy and population. It staves and otherwise certain Chinese economic collapse and population revolt against the Chinese Communist (in name only) Party and chain of unpredictable chaos generating events on global scales.

    However, in a world that is already over populated with humans on planetary sustainability basis, this strategy has a limited effective utilization period. That period being directly tied to the global depletion of FCRs starting with energy, food and food production chemicals. Consequently, the big geopolitical question becomes – what then? What’s the next strategy for China, the next opportunity to utilize the massive Chinese population to maintain itself and or even further its global dominance? This is what the rest of the world should be contemplating about now.

  2. Thomas A Pavek

    As we enter 2018, two things have never been truer: change is inevitable and we all resist change. In the meantime, the information to evaluate what changes are “positive” and which are “destructive” is getting much harder for most everyone to interpret. There are many LOUD voices on all sides of all issues and to make it worse, its getting harder to rely upon or trust any of them! It seems as people want to convince others that their point of view is more “right” or salient than others–the volume simply increases. I, for one, am sick of it! My new mantra is “Everyone is right ! It is much easier for me than “Everyone is wrong”–especially the ones I dislike or am politically and philosophically appalled by.

  3. Talk about confusion the USA is the poster child for prefabricated bullsh*t. It is still and always will be about the power over the masses, here. or in China, or Russia it does not matter. The “debt bombs” that we let our “Lawyers in Love” (Jackson Browne) leaders propel us towards will be massive and deathly ugly. Re-inflating this baby will be much more difficult if not impossible and many people will die in the process both financially and literally. Healthcare, Medicare, Medicaid, Social Security and wages are all on the chopping block as our debt-bubble further inflates.

    Talk about lambs to the slaughter. The power given to these few major Central Banks and the policies they have created will leave gaping holes from these debt bombs in almost every country in our world. The central banks will step-in and make it all better, right?

    2018 could and probably will get very ugly. Have plan Stan. Get out of as much debt as you possibly can and hedge some of your wealth in physical gold and silver NO paper have it in your hands. Get liquid and stay very nimble. Don’t let the more powerful control your financial life any more than you HAVE to.

    Fu*k the idea of a war on Christmas, it is a war on us well 90% of us and you can bet your ass the other 10% are hedged with gold and silver lots of it. Many have all ready left the indices, leaving the lambs to the slaughter. Don’t be one of them.

  4. By the time you have realized that all the promises that where made to you as young person are unsustainable,
    (And the people that made those promises to you at the time knew it)
    For a lot of folks it’s just to late!!
    That my friends WAS the master plan!
    So now you can have a pity party or suck it up.
    Quit sniveling!

  5. Having been in that place long past, I can still remember that it was the Chinese who prospered economically from the folly of the fog of war.

    They invested their capital in a lot of businesses and then when we decided to leave, they stayed and built upon the infrastructure we left behind, paid for by American tax dollars and our debt funded war game.

    That was1971. Now it is a destination for their redistribution of population and advancing usurpation of another indigenous population.

    Who really played the long con? The military / industrial complex did not recognize what the troops on the ground saw and brought back with them.

    With SWRs and knowing the need we have to finance our new TaxCutScam, we have the most too lose.

  6. The core problem is that the American government is the best that billionaires can buy and that the rest have to pay for.

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