[HN Gopher] Why is Xi Jinping building commodity stockpiles?
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Why is Xi Jinping building commodity stockpiles?
Author : ianrahman
Score : 37 points
Date : 2024-07-25 21:04 UTC (2 hours ago)
(HTM) web link (www.economist.com)
(TXT) w3m dump (www.economist.com)
| tivert wrote:
| https://archive.is/yBWfy
| alephnerd wrote:
| From TFA: Hedging against a potential trade war if Trump became
| president.
|
| "Now Mr Trump, who makes no secret of his desire to hobble China,
| has a decent chance of returning to power. In a confrontation,
| America could restrict its own food exports to China, which have
| rebounded since a truce of sorts was reached, and lean on other
| big suppliers such as Argentina and Brazil to do likewise. It
| could try to influence countries that sell metals to China,
| including Australia and Chile. And most of China's commodity
| imports are shipped through a few straits and canals that America
| could seek to block for Chinese vessels by, say, posting military
| ships nearby.
|
| ...
|
| For now, the evidence suggests that hoarding is more likely to be
| a defensive measure, since it is not yet on a scale to be secure
| in a hot conflict"
|
| ----
|
| Also, lots of people forget that Chinese who grew up in the 1990s
| tend to be fairly anti-American due to the Tiannamen Sanctions,
| the Taiwan Straits Crisis, and the bombing of the Chinese Embassy
| in Belgrade along with the Collapse of the USSR and the Gulf War
| (the Iraqi Army used the same doctrine and weaponry as the PLA in
| the 1990s).
|
| There is a massive culture gap between Chinese and American
| leadership, and it has the potential of spiraling into conflict
| if diplomacy and openness in the relationship isn't managed.
|
| Both sides think the other is out to get them.
| tivert wrote:
| > Also, lots of people forget that Chinese who grew up in the
| 1990s tend to be fairly anti-American due to the Tiannamen
| Sanctions, the Taiwan Straits Crisis, and the bombing of the
| Chinese Embassy in Belgrade...
|
| Don't forget the _propaganda_ around those things, which is an
| important factor. I was talking to a Chinese person about the
| bombing of the Chinese Embassy in Belgrade, and they were
| certain the US _never_ apologized for it. However, they had to
| concede they had been mislead when I found a old C-SPAN clip of
| Clinton apologizing for it during a press conference.
|
| I bet Chinese media around that time deliberately cultivated
| outrage by selectively reporting on the bombing but ignoring
| the apology.
| throw310822 wrote:
| Given what the gp is talking about- colluding with many major
| suppliers to stop food and commodities exports to China, and
| even blocking sea passages to prevent shipments from reaching
| them (an act of war)- I don't see why Chinese people need any
| propaganda to hate the US. Reality is more than enough.
| qwytw wrote:
| > colluding with many major suppliers to stop food and
| commodities exports to China > Reality is more than enough
|
| Except it's all hypothetical?
| jrflowers wrote:
| I'd venture a guess that there are some folks that are more
| mad about the bombing itself than the perceived lack of
| apology for the bombing.
| bdjsiqoocwk wrote:
| Moving goalposts. The claim was they never apologized, and
| they did.
| jrflowers wrote:
| They moved the goalposts from "mad about not apologizing
| for the bombing" to "mad about the bombing itself"? How
| does that work in linear time considering the bombing
| itself happened _before_ a window for apology?
| tivert wrote:
| > They moved the goalposts from "mad about not
| apologizing for the bombing" to "mad about the bombing
| itself"?
|
| I think the GP was saying _you_ moved the goalposts.
|
| And the perceived lack of apology was an important factor
| in this person's (long past) anger.
|
| I mean, think of it this way: if someone hurt you by
| mistake, would you feel the same if 1) they apologized
| for their mistake or 2) didn't apologize (showing a lack
| of care towards you). For me, at least, I'd only get mad
| at the latter, and I wouldn't be so mad about the harm
| itself, but rather the disrespect of not apologizing.
| jrflowers wrote:
| > I mean, think of it this way: if someone hurt you by
| mistake, would you feel the same if 1) they apologized
| for their mistake or 2) didn't apologize (showing a lack
| of care towards you). For me, at least, I'd only get mad
| at the latter...
|
| If somebody bombed my embassy I would be mad at them. If
| they didn't apologize, I would probably be more mad at
| them. If they did apologize, I could reasonably be _less_
| mad at them for bombing my embassy but I could be
| reasonably forgiven for still being somewhat mad. Because
| my embassy got bombed.
| dist-epoch wrote:
| They have mountains of dollars which could suddenly be frozen
| like Russia's dollars were.
|
| Much better to exchange them for something useful.
| elzbardico wrote:
| Or that could become suddenly a lot less valuable due to a US
| treasury default.
| tivert wrote:
| IMHO, stockpiles are good policy since they build resilience. If
| China's doing this but not the West, it's a display of some of
| the advantages of their governance model (not to say that it
| doesn't have disadvantages, too). The US especially seems to be
| infected by short-term, happy-path thinking that's eager and
| willing to risk the future for a little bit of savings today.
| Carrok wrote:
| You don't think the west has stockpiles?
| perihelions wrote:
| The US burned half of its stockpile in the last four
| years[0], as a (politically popular!) counter to inflation.
| It's as the parent comment says: we're presently infected by
| short-term thinking, exchanging gigantic risks in the future
| for small benefits in the present.
|
| [0] https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve
| _(U...
| mupuff1234 wrote:
| A large surge in inflation seems like a decent time to use
| the stockpiles - it's not like they can't be replenished.
|
| Especially given that the US is an exporter of energy.
| bdjsiqoocwk wrote:
| Damn I hate it when it turns out a Republican talking point
| had some truth to it.
| qwytw wrote:
| Wouldn't even at peak levels (700mil) the total reserve be
| enough for just ~35 days or so? Of course that's still a
| lot but I'm not sure if 300 million barrels over a couple
| of years could affect prices that much.
|
| Also it kind of made sense to sell when the price was so
| high and fill it up later.
| darth_avocado wrote:
| If its 35 days at 700 mil, it's 15 at 300. 35 days
| doesn't seem like a lot but in case of emergencies, I'll
| take 35 over 15 any day. You need to give yourselves time
| to at least react to situations.
| JumpCrisscross wrote:
| > _You need to give yourselves time to at least react to
| situations_
|
| Our strategic reserves are for low-grade emergencies. For
| anything minor, the _status quo_ will do. For anything
| major we'll re-route civilian supplies. In between, the
| strategic reserve lets the military increase consumption
| without raising voters' gas prices.
| shakow wrote:
| > for just ~35 days or so?
|
| At full consumption. I'm pretty sure that in
| circumstances that would lead to the use of the
| reserverve, oil would be strongly rationed and directed
| towards hospitals/army/police/logicstics/etc.
| sudosysgen wrote:
| The US is a net petroleum exporter now, so using the
| stockpile for price stabilization is the right call.
|
| Using it to stabilize prices is actually good long term
| thinking, because a quicker reduction in inflation will
| have far more long term benefits than the short term optics
| of liquidating a ""strategic asset"".
|
| The only risk of a strategic petroleum shortage in the US
| would be as the result of an attack on US infrastructure,
| and I don't see how the petroleum reserves wouldn't be the
| first target. So there isn't any strategic risk in reducing
| the stockpile. When it was created, the US was a massive
| petroleum importer - it was a strategic asset but not
| anymore.
| JumpCrisscross wrote:
| We're the largest producer of petroleum on the planet.
| China is not.
| toomuchtodo wrote:
| Conversely, China is the largest producer of EVs on the
| planet, and will reach peak oil demand this year or next
| due to their EV manufacturing ramp rate.
|
| China is playing to win the future, and it's clear in how
| they operate.
| JumpCrisscross wrote:
| > _China is the largest producer of EVs on the planet,
| and will reach peak oil demand this year or next due to
| their EV manufacturing ramp rate_
|
| Sure. They have a strategic incentive to electrify their
| military. In the meantime, they need stockpiles.
| toomuchtodo wrote:
| Maybe we're talking past each other. China isn't
| electrifying their military, they are electrifying all
| light transportation. This destroys demand for oil,
| slowly working towards negating it as a point of leverage
| during a geopolitical conflict. You can't embargo,
| blockade, or use economic sanctions on an input a country
| doesn't need.
|
| Oil demand destruction, EVs, renewables, are all national
| economic security issues. They are stockpiling,
| decoupling, and becoming self sufficient internally to be
| prepared for an isolationist period. We can wildly
| speculate why, but it's very clear that they do not want
| to be beholden to other nation state economic
| counterparties.
| TomK32 wrote:
| Just like the markets in the West, the chinese market for
| EVs is saturated. That's why they have to ship their EVs
| to Europe before they have a buyer.
| toomuchtodo wrote:
| There is a market clearing price at which even the most
| opposed EV buyer becomes one (total cost of ownership,
| fuel cost volatility, etc). The subsidies must last only
| until sufficient internal combustion manufacturing
| capacity has been reduced to where EVs become the only
| option. Like bankruptcy, this transition will happen
| slowly, and then all of a sudden (as there is a minimum
| volume of units a combustion vehicle factory must sell to
| remain viable).
|
| > The Chinese auto industry is experiencing a
| revolution," said John Zeng, the director of Asia
| forecasting at GlobalData Automotive. "The old internal
| combustion capacity is dying."
|
| > Sales of gasoline-powered cars plummeted to 17.7
| million last year from 28.3 million in 2017, the year
| that Hyundai opened its Chongqing complex. That drop is
| equivalent to the entire European Union car market last
| year, or all of the United States' annual car and light
| truck production.
|
| https://www.nytimes.com/2024/04/23/business/china-auto-
| facto... | https://archive.today/4jCiQ
|
| https://electrek.co/2023/04/01/ice-car-values-plummet-in-
| chi...
| riehwvfbk wrote:
| Since 2018, and only if you don't think of OPEC as a
| single block (which in many ways they are). Also, being a
| top producer in the short term is just another example of
| short-term thinking. 80% of the world's oils reserves are
| in OPEC countries. Burning through a limited supply in
| record time is hardly something to be proud of.
| dghlsakjg wrote:
| Keep in mind that the US is the worlds largest oil producer
| right now, and exports ~30% of production. North America as
| whole has a serious oil output that massively over-serves
| what is needed by the continent.
|
| Canada, arguably the closest US ally, is number 4 for oil
| output, and Mexico is 11th.
|
| Keeping the reserves full doesn't really serve a purpose
| when you are capable of producing far more than you need.
| tivert wrote:
| > You don't think the west has stockpiles?
|
| A few small and badly run ones. IIRC, the US's medical
| stockpile was _already_ bare at the start of COVID, and I
| recall reading controversy about if it should be replenished
| at all when its potential worth had literally just been
| proven. The petroleum stockpile seems like it 's mostly used
| for electioneering (e.g. release stockpiles in the run up to
| an election to lower gas prices to help incumbents). I'm not
| aware of any other ones, like for food and raw materials
| besides petroleum.
| rhplus wrote:
| Cheese and helium, what else do we need?
|
| https://www.farmlinkproject.org/stories-and-
| features/cheese-...
|
| https://en.wikipedia.org/wiki/National_Helium_Reserve
| observationist wrote:
| At least the parties at the end will be entertaining.
| TaylorAlexander wrote:
| Indeed. This seems similar to the hand-wringing I see about
| China's government subsidized manufacturing being "unfair".
| Actually government subsidized manufacturing is a great idea
| and its the entire reason we have a space program!
| Fauntleroy wrote:
| Well, it _is_ "unfair"--it's just not "unfair" to the country
| doing it.
| toomuchtodo wrote:
| American Businesses: "How are we supposed to profit if you
| don't govern poorly like we do?!"
|
| Your country can do well too if you invest for the long
| term instead of chasing quarterly numbers and strip mining
| the economy.
| bdjsiqoocwk wrote:
| You think China subsidizing manufacturers so they make
| cheaper sneakers is similar to the Apollo program? That one
| I'd never heard before. Did you come up with it yourself or
| is that a take you've seen somewhere?
| darth_avocado wrote:
| Parent didn't say sneakers, but subsidizing manufacturing
| to retain the ability to do is a jobs program that also has
| strategic benefits. We already kind of do it in areas like
| defense. Other manufacturing areas like medicine,
| electronics etc. would actually not be a bad idea.
| tivert wrote:
| > You think China subsidizing manufacturers so they make
| cheaper sneakers...
|
| If you think China is only subsidizing the manufacturing of
| stupid things like sneakers, you're sorely misinformed.
| They pretty much have a lock on solar panel manufacturing,
| due to subsidies, and I think they drove most of their
| Western competitors out of business. That's kind of
| strategic industry, with the green energy transition. IIRC,
| they're also getting there with batteries and EVs, but at
| least the West is starting to use protectionism again to
| protect that area.
|
| IIRC, one of the nice things about China is they don't
| really care if these companies are profitable. They'll
| setup a situation of vicious cut-throat competition and
| overcapacity, instead of a few complacent but profitable
| oligopolies like the West seems to prefer. That means they
| win at the national level.
|
| > ...is similar to the Apollo program?
|
| The Apollo program was like 50 years ago. The US needs to
| stop leaning on its past glories to try to make its
| complacency comfortable, and instead actually deal with its
| problems.
| JumpCrisscross wrote:
| > _it 's a display of some of the advantages of their
| governance model_
|
| It's the reality of countering an air-sea superpower as a
| country supplied by sea. We do a _tonne_ of long-range
| logistics readiness exercises China doesn't. Because they don't
| need to.
|
| There is no inherent virtue in stockpiling. An attritive war is
| all about production anyway, not starting stock. Our weakness
| is in low production rates of all manner of materiel, not a
| lack of stockpiles.
| shakow wrote:
| > as a country supplied by sea
|
| I can't read the whole article, but according to the header,
| they are stockpiling resources they can produce (and do so)
| themselve (grain, oil, gas).
| 29athrowaway wrote:
| It is the MBA virus.
| jopsen wrote:
| > The US especially seems to be infected by short-term, happy-
| path thinking...
|
| Are we so sure that's true?
|
| Aren't tax deferrals on 401ks a long term bet?
|
| It's structured differently, power is distributed rather than
| concentrated.
|
| Is power concentration a good thing?
|
| Aren't long term bets extremely risky? Professional investors
| have a hard time beating the market. You think politicians can?
|
| Arguably, the ability to tax people does offer other investment
| opportunities.
| tivert wrote:
| > Aren't tax deferrals on 401ks a long term bet?
|
| You misunderstand. I'm mainly talking about the policy level,
| not the individual level. The US let a fetish for free
| markets override pretty much every other national priority.
|
| Also 401ks to a lot of things, and one of the more
| interesting ones they encourage laborers to internalize the
| interests of the capitalist class, which they are very much
| not served by.
| aiauthoritydev wrote:
| Meh. It is a dumb thing dictators do everywhere to appear
| strong. There is no shortage of any kind of commodity in the
| western world.
| slowmovintarget wrote:
| Yet. One good-size war could flip that.
|
| There are food lines in New York, and 2 million people there
| can't afford food... just a small supply-chain disruption and
| we'll have even more massive stability problems.
| jncfhnb wrote:
| A part of it is probably just great prices on Russian oil
| j7ake wrote:
| Because commodities are cheap these days, why wait for the next
| commodities boom to buy when you can buy now on sale?
| epoxia wrote:
| "Instead, China appears to be stockpiling materials at a rapid
| pace--and at a time when commodities are expensive." 2nd
| paragraph in the article disagrees.
| TomK32 wrote:
| Xi the grab hag https://en.wiktionary.org/wiki/grab_hag
|
| I couldn't read whether those additional 16% last year (after a
| pandemic and the unexpected 3-day SMO by Ruzzia in 2022) are just
| a fluke or way above the e.g 2014-2019 average. Also, how much of
| those 16% are cheap Ruzzia oil? The drop this year could be
| explained with Ukraine's successful campaign on Ruzzia's
| refineries and export bans on some oil products that already have
| been extended beyond the harvest season. Are we sure China is
| intentionally building up stockpiles or it is accidentally
| because it's not able to shift imported raw materials into its
| stuttering economy?
|
| Just picking one commodity here: Gas of which China now has 23
| days worth of storage is ridiculously small compared to the whole
| year that Austria has in it's storage. Other players like the US
| have even more natural gas stored, in it's natural habitat below
| earth and not in facilities that are easy targets for modern
| missiles.
|
| I understand the danger of mainland China attacking the Republic
| of China, but it would be much more suicidal for China than
| Ruzzia's attack on Taiwan. Argentina is mentioned in the article,
| they plan to drop their own currency for the US dollar, thus no
| action against the will of Washington will happen.
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