I can imagine a world where China finalizes their "official" crypto currency, transitions their entire economy over, forces all international trade to use it, and it becomes the standard currency for logistics. It'll provide traceability for them for all Chinese-connected transactions forever. The best oversight and control mechanism. They find current sanctions ineffective because the levers aren't strong enough yet, but they'll be more than happy to sanction countries themselves in the future.
China is a large economy but it's nothing like the dominant force many people seem to think. China is 16% of US trade, 22% of EU trade, 22% of Japan's trade, 22% of South Korea's trade, etc... the numbers are the same for just about everyone.
If you add up all the West-aligned countries (including Vietnam, Philippines, etc - they're already in a cold war with China over the South China Sea), you're looking at 80-90% of China's total trade volume.
Without some kind of major political split in the dollarized world, China just doesn't have that kind of leverage. We're currently seeing the opposite of that split.
The Digital Yuan is a digital currency but not a cryptocurrency. It works similarly to a bank account except instead of having an account with the bank, you have one directly with the government, although currently all e-RMB accounts are attached to traditional bank accounts.
Haha except there will be no customers and manufacturers will move to other cheaper places… if you think the dollar is going away without a fight we’ve seen how the money works now and it’s all controlled by the West right now. That’s why the Chinese want to change it and not a single western nation will agree to it ever because how does it work for them?
Since all crypto transactions are traceable, I doubt it's something corrupt officials want to implement, they wouldn't be able to hide their stealing that way.
The Chinese government most likely can already see virtually all transactions made by the common Chinese folk, since WeChat/AliPay is very popular there.
> I can imagine a world where China finalizes their "official" crypto currency, transitions their entire economy over, forces all international trade to use it
Likewise India is setting up alternative cross border banking with Russia. Will be fascinating to see the end-result of this; how someone with a Russian bank account can pay for a meal in Shanghai or Mumbai.
> how someone with a Russian bank account can pay for a meal in Shanghai or Mumbai.
Two weeks ago they'd just pull out their Visa/MasterCard, and since the restaurant and the Russian's bank are both in the Visa network, it gets taken care of that way. Visa and MasterCard are blocking service to sanctioned Russian banks, which explains why Russians are busy going to the ATM to pull out cash.
China has their own network called UnionPay, so those banks have probably been calling them to join this last week.
I can imagine that Russians will also install AliPay or WeChat.
Russia has chosen a path that leads to them becoming a Chinese vassal state. China needs their oil, gas, minerals, and food, and is far richer and more powerful. China will end up turning Russia into a resource extraction client state.
Edit: I wonder if China greenlit the invasion precisely because they understand that this will hand them total control of Russia. Putin is a fool who may have been played.
Russia's elite may actually fare very well in the long term, since it'll be similar to how the USA props up the Saudi royal family in exchange for their ability to pump oil and regulate the market price. Russia's people will find themselves more and more disempowered and the country will continue to suffer massive brain drain.
From the Chinese perspective, of the USA has their Saudi, why can't they have their Russia? For the Russian commoners it will be a bad deal, but if the deal can be made attractive enough for the Russian leadership there seems to little they can do.
Thats partially the reason for Russia wanting to "get the band together again" with the reformation of the USSR, or a Greater Russia. You do get the feeling that the Stans are the next set of nations to experience a post USSR anschluss. The only way they can get anywhere near the USSR in power and influence is to be bigger and with more people. That way it can threaten Western Europe more effectively and hold its own against China and the US.
Exactly. CCP, the most powerful opposition to democracy, gains foothold next to US and EU borders. Putin and the elite gets their bonuses and keeps living in their mansions. No one dares supporting a revolution in Russia, China's new buffer state, lest Xi gets angry. Cosmopolitan middle class Russians suffer for a bit, forget iPhones and learn Chinese. Brainwashed Russians are happy to unite with their communist comrades.
It was to be expected. Slightly related, there's also this, from today's Financial Times [1]:
> Commodity prices soar to highest level since 2008 over Russia supply fears (...) With exports from Ukraine and Russia at a virtual halt, wheat soared, with Chicago futures at the highest levels since 2008, when a spike in grain prices triggered protests and riots in Africa, Asia and Latin America.
didn't see that many journalists and opinion pieces mentioning this side of the sanctions, i.e. what negative effects they will have on us.
Interesting. I don't read a lot of opinion pieces, but I can't recall an article that didn't point out that cutting SWIFT off to the Russians wouldn't have negative implications for the West. Those would be from sources such as Reuters, BBC, Axios, NYT, New Yorker, Atlantic, etc.
Peter Zeihan had a good video on this on the night after the invasion. There’s a lot of possibly nasty, and somewhat likely side effects other than nuclear war. For example, Russia is the largest exporter of fertilizers (iirc).
This was a predictable outcome. Cutting off SWIFT access forced Russia to CIPS. Where does this lead? Strengthening CIPS with this move surely weakens the dollar's reserve status globally.
I think the dollar has never looked better actually.
Who from "the West" is going to consider major investments in China now? If by some miracle you manage to keep your IP secure, you risk losing your entire investment if/when the world gets tired of their support for the facists in Russia.
Which system would you trust? SWIFT or something controlled by China? I have a feeling the China based system would be used far more often politically than SWIFT ever would, especially against those that China deemed to be problematic to them.
Chinese banks still need SWIFT, and if we find any Chinese banks using CIPS to do business with sanctioned Russian entities, they will get cut off too and now both Chinese and Russian banks will be screwed.
> Strengthening CIPS with this move surely weakens the dollar's reserve status globally.
No it doesn't. That's a fantasy held primarily by people that dislike the US, the present world order, and want it all rearranged to their bias. You can instantly spot a person's bias by how quickly they whip out the premise that the USD global reserve is going to be damaged by xyz (it seems to practically be a fetish for some people). Typically there's no actual argument presented, just a statement that of course xyz will happen now, finally. You'll see that throughout the Russia war threads (here or elsewhere). Throughout my lifetime I've seen it repeatedly claimed: well of course, now the USD global reserve standard will begin to decline (the Euro was supposed to severely damage it; whoops).
The vast majority of the world isn't going to have a strong interest in holding Yuan and that'll define the global reserve status. There are no other major competitors to the USD other than potentially the Yuan, and it's not a serious competitor because of the nature of the CCP. As it is, the Yuan has a smaller presence globally than the Yen and that says a lot given the size of China's economy (ie there's no trust in China and they haven't made much progress in that respect over the past decade).
It's unclear to me how China acting in cooperation with Russia and to the detriment of the intended outcomes of sanctions is not seen as a thematically aggressive move?
China is concerned only with itself, they obviously don’t care about Ukraine but are eager to loot the sanctioned economy of Russia. The coalescing of Western interests and reinvigorated NATO are not in their favor of course, but are no existential threat.
Ultimately, I don’t think that’s necessarily a bad thing. Democracy would be ideal, but I’d rather see Russia utterly dependent on Beijing than autocratic and warmongering as they are now.
I suspect that this was considered an acceptable outcome: the U.S. and European governments certainly don't see eye to eye with China but China is more stable, less beholden to the whims of one person and tends to be somewhat more willing to consider the long-term ramifications of things like climate change. I think that a fair number of people would consider Russia falling into the Chinese orbit preferable to Putin's constant provocations.
This is why countries were originally reluctant to remove Russia from Swift. The US was afraid that it would reduce world trade in USD. Then it became a PR nightmare so they did it.
This new world order the Russians and Chinese are looking to create sounds like a much much worse deal for Russia and Putin and the Oligarchs, than being part of the world system, it makes zero sense. China really don’t care one bit about Russia, it’s like them buddying up with Holland and Belgium specially. What is the point? Such small fry for no reward to them. The Russians being stupid enough to think things will get better for them by being friends with China is beyond insane. Good for China and bad for Russia.
Nations no longer matter at all what remains are networks of interconnected multinational corporations. These networks are based and administrated by governments that exist solely to provide services to their corporate clients and represent their interests globally. USA vs China competition is a quaint and an obsolete notion. The world hasn't worked that way since the 1970s and the end of the Cold War marked the end of major nations being sovereign entities as capitalism prevailed.
EU is still paying Russian corporations for oil and natural gas and the existing pipelines keep running and will keep running as long as the Russian oil fields have supply. This is an essential input to EU based corporations especially manufacturing and heavy industry. Chinese corporations work closely with their American corporations using a single global financial system that's been around for over 75 years. These corporations compete fiercely in markets but their boards and officers are best friends and know each other by first name basis.
US/EU/UK are the maintainers of this global financial system and bear the costs of maintenance and regulation. This works for Chinese companies as China doesn't have to take the costs of maintenance and can enjoy the benefits for free. It's a gift from US/EU/UK to China and they appreciate it and love Dollars/Euros to buy nice mansions, yachts and other luxuries.
China and USA governments engage in political theatre to keep their people motivated to work and further corporate interests which benefit them mutually. War is very bad for business and the Chinese government especially Xi is very disappointed with Putin's stupid and reckless activities.
So you can't put boots on the ground because that starts World War Three. That leaves you with sanctions. The problem with sanctions is they're a form of colletive punishment and they disproportionately affect poor people. As evidence of this, Russian banks are running out of foreign currency reserves and bank accounts and Putin has signed executive orders to force all payments to be converted into rubles (80% of them at least) and rubles have a massive inflation problem so people who have deliberately held USD are going to get hosed.
But what else do you do? Particularly against a powerful country that can produce its own food and energy. The effects are going to be predictably limited.
Any sanctions are going to be a profit incentive for someone else to circumvent them. We've seen this time and time again with oil embargoes in the Middle East, layers of Hong Kong companies to bypass North Korea sanctions [1] and so on. It's clear at this point that China has decided to stay neutral, so much so that a story came out yesterday where the Chinese asked the Russians to delay the invasion until after the Olympics [2].
Other countries will serve their primary interests and weaken any sanctions, such as the UK bowing to banks to quietly give a 30 day exclusion to Russian banks [3].
So the rich and powerful will be squeezed temporarily but will manage to bypass a lot of restrictions through intermediaries that may well include China and other regimes, all while things are probably going to get real bad for normal Russians who don't agree with the invasion and can't do anything about it either.
I would at least consider it a positive if the developed world started clamping down on oligarchs hiding money in luxury real estate.
All of this is known and predictably ineffective, which is why it was so important to at least try and avoid this situation diplomatically. It's now so much more difficult now that Putin has royally screwed up and completely miscalculated with an unthinkable, unjustifiable and unwinnable invasion. But this will end diplomatically regardless at some point because the alternative is nuclear war. It's just that Ukraine is going to get wrecked in the meantime.
The US would never accept a hostile military in its backyard. It almost provoked nuclear war in Cuba 60 years ago in exactly that situation. This idea that Russia should just accept a hostile military alliance (from their perspective) on their doorstep is completely inconsistent and insane.
And before anyone brings up self-determination, let me ask where that principle is when it comes to Palestine.
22-28% interest credit cards like Visa and MasterCard are running people's lives. If China can provide these services for less, it's a win not a loss.
Good guy China freeing Russian people from American style debt Slavery. I had a cousin that financed his bills during a downturn of his business out of desperation. Then ended up with house size payments, had to cut back on employees and nearly worked himself to death working 16 hours days in the following years trying to keep up with that ridiculous interest rate.
These indiscriminate sanctions against the whole Russian populations might be one of the biggest political blunders of the decade: The Russian population will likely channel their suffering and anger against the West instead of their government. China will buy crumbling Russian assets for cheap. Russia and China will become closer allies. The whole global economy will be thrown into a second (supply chain …) shock.
What would have been the alternative (after the invasion started)? Targeted complete sanctions against the government and all enablers for sure, but would that be enough?
[+] [-] cheschire|4 years ago|reply
[+] [-] stickfigure|4 years ago|reply
https://en.wikipedia.org/wiki/List_of_the_largest_trading_pa...
China is a large economy but it's nothing like the dominant force many people seem to think. China is 16% of US trade, 22% of EU trade, 22% of Japan's trade, 22% of South Korea's trade, etc... the numbers are the same for just about everyone.
If you add up all the West-aligned countries (including Vietnam, Philippines, etc - they're already in a cold war with China over the South China Sea), you're looking at 80-90% of China's total trade volume.
Without some kind of major political split in the dollarized world, China just doesn't have that kind of leverage. We're currently seeing the opposite of that split.
[+] [-] robjan|4 years ago|reply
[+] [-] andy_ppp|4 years ago|reply
[+] [-] zelon88|4 years ago|reply
[+] [-] netsharc|4 years ago|reply
The Chinese government most likely can already see virtually all transactions made by the common Chinese folk, since WeChat/AliPay is very popular there.
[+] [-] delusional|4 years ago|reply
[+] [-] xadhominemx|4 years ago|reply
Funny, I could not imagine this happening
[+] [-] otikik|4 years ago|reply
[+] [-] throwaway4good|4 years ago|reply
[+] [-] netsharc|4 years ago|reply
Two weeks ago they'd just pull out their Visa/MasterCard, and since the restaurant and the Russian's bank are both in the Visa network, it gets taken care of that way. Visa and MasterCard are blocking service to sanctioned Russian banks, which explains why Russians are busy going to the ATM to pull out cash.
China has their own network called UnionPay, so those banks have probably been calling them to join this last week.
I can imagine that Russians will also install AliPay or WeChat.
[+] [-] singularity2001|4 years ago|reply
[+] [-] deepstack|4 years ago|reply
[+] [-] api|4 years ago|reply
Edit: I wonder if China greenlit the invasion precisely because they understand that this will hand them total control of Russia. Putin is a fool who may have been played.
Russia's elite may actually fare very well in the long term, since it'll be similar to how the USA props up the Saudi royal family in exchange for their ability to pump oil and regulate the market price. Russia's people will find themselves more and more disempowered and the country will continue to suffer massive brain drain.
[+] [-] em500|4 years ago|reply
[+] [-] drumhead|4 years ago|reply
[+] [-] astkaasa|4 years ago|reply
[+] [-] throwaway290|4 years ago|reply
[+] [-] paganel|4 years ago|reply
> Commodity prices soar to highest level since 2008 over Russia supply fears (...) With exports from Ukraine and Russia at a virtual halt, wheat soared, with Chicago futures at the highest levels since 2008, when a spike in grain prices triggered protests and riots in Africa, Asia and Latin America.
didn't see that many journalists and opinion pieces mentioning this side of the sanctions, i.e. what negative effects they will have on us.
[1] https://archive.ph/Z3RM9
[+] [-] alamortsubite|4 years ago|reply
[+] [-] christophilus|4 years ago|reply
[+] [-] polynomial|4 years ago|reply
[+] [-] mizzack|4 years ago|reply
[+] [-] DrBazza|4 years ago|reply
https://en.wikipedia.org/wiki/Renminbi#Managed_float
https://en.wikipedia.org/wiki/Renminbi_currency_value#Intern...
https://en.wikipedia.org/wiki/European_Exchange_Rate_Mechani...
[+] [-] mvc|4 years ago|reply
Who from "the West" is going to consider major investments in China now? If by some miracle you manage to keep your IP secure, you risk losing your entire investment if/when the world gets tired of their support for the facists in Russia.
[edit] since I wrote this comment....
https://twitter.com/jakluge/status/1499373653372420099
[+] [-] JumpCrisscross|4 years ago|reply
This was an unstated policy goal. Russia as a regional power is provably dangerous. As a Chinese vassal, at least it’s contained.
Add to that the significant costs to the American economy dollar hegemony has brought [1], and this is broadly a win-win-win.
[1] https://www.wsj.com/amp/articles/how-the-reserve-dollar-harm...
[+] [-] drumhead|4 years ago|reply
[+] [-] thereddaikon|4 years ago|reply
[+] [-] tiahura|4 years ago|reply
[+] [-] xadhominemx|4 years ago|reply
[+] [-] adventured|4 years ago|reply
No it doesn't. That's a fantasy held primarily by people that dislike the US, the present world order, and want it all rearranged to their bias. You can instantly spot a person's bias by how quickly they whip out the premise that the USD global reserve is going to be damaged by xyz (it seems to practically be a fetish for some people). Typically there's no actual argument presented, just a statement that of course xyz will happen now, finally. You'll see that throughout the Russia war threads (here or elsewhere). Throughout my lifetime I've seen it repeatedly claimed: well of course, now the USD global reserve standard will begin to decline (the Euro was supposed to severely damage it; whoops).
The vast majority of the world isn't going to have a strong interest in holding Yuan and that'll define the global reserve status. There are no other major competitors to the USD other than potentially the Yuan, and it's not a serious competitor because of the nature of the CCP. As it is, the Yuan has a smaller presence globally than the Yen and that says a lot given the size of China's economy (ie there's no trust in China and they haven't made much progress in that respect over the past decade).
[+] [-] maerF0x0|4 years ago|reply
The Friend of my enemy is my enemy.
[+] [-] dahdum|4 years ago|reply
Ultimately, I don’t think that’s necessarily a bad thing. Democracy would be ideal, but I’d rather see Russia utterly dependent on Beijing than autocratic and warmongering as they are now.
[+] [-] acdha|4 years ago|reply
[+] [-] newuser94303|4 years ago|reply
[+] [-] dorianmariefr|4 years ago|reply
[+] [-] mediumsmart|4 years ago|reply
[+] [-] andy_ppp|4 years ago|reply
[+] [-] raverbashing|4 years ago|reply
[+] [-] esics6A|4 years ago|reply
EU is still paying Russian corporations for oil and natural gas and the existing pipelines keep running and will keep running as long as the Russian oil fields have supply. This is an essential input to EU based corporations especially manufacturing and heavy industry. Chinese corporations work closely with their American corporations using a single global financial system that's been around for over 75 years. These corporations compete fiercely in markets but their boards and officers are best friends and know each other by first name basis.
US/EU/UK are the maintainers of this global financial system and bear the costs of maintenance and regulation. This works for Chinese companies as China doesn't have to take the costs of maintenance and can enjoy the benefits for free. It's a gift from US/EU/UK to China and they appreciate it and love Dollars/Euros to buy nice mansions, yachts and other luxuries.
China and USA governments engage in political theatre to keep their people motivated to work and further corporate interests which benefit them mutually. War is very bad for business and the Chinese government especially Xi is very disappointed with Putin's stupid and reckless activities.
[+] [-] eternalban|4 years ago|reply
Did you read this? https://www.airuniversity.af.edu/CASI/Display/Article/292349...
[+] [-] phendrenad2|4 years ago|reply
[+] [-] exabrial|4 years ago|reply
[+] [-] anovikov|4 years ago|reply
[+] [-] spacemanmatt|4 years ago|reply
[+] [-] 2OEH8eoCRo0|4 years ago|reply
[+] [-] natch|4 years ago|reply
[+] [-] jmyeet|4 years ago|reply
But what else do you do? Particularly against a powerful country that can produce its own food and energy. The effects are going to be predictably limited.
Any sanctions are going to be a profit incentive for someone else to circumvent them. We've seen this time and time again with oil embargoes in the Middle East, layers of Hong Kong companies to bypass North Korea sanctions [1] and so on. It's clear at this point that China has decided to stay neutral, so much so that a story came out yesterday where the Chinese asked the Russians to delay the invasion until after the Olympics [2].
Other countries will serve their primary interests and weaken any sanctions, such as the UK bowing to banks to quietly give a 30 day exclusion to Russian banks [3].
So the rich and powerful will be squeezed temporarily but will manage to bypass a lot of restrictions through intermediaries that may well include China and other regimes, all while things are probably going to get real bad for normal Russians who don't agree with the invasion and can't do anything about it either.
I would at least consider it a positive if the developed world started clamping down on oligarchs hiding money in luxury real estate.
All of this is known and predictably ineffective, which is why it was so important to at least try and avoid this situation diplomatically. It's now so much more difficult now that Putin has royally screwed up and completely miscalculated with an unthinkable, unjustifiable and unwinnable invasion. But this will end diplomatically regardless at some point because the alternative is nuclear war. It's just that Ukraine is going to get wrecked in the meantime.
The US would never accept a hostile military in its backyard. It almost provoked nuclear war in Cuba 60 years ago in exactly that situation. This idea that Russia should just accept a hostile military alliance (from their perspective) on their doorstep is completely inconsistent and insane.
And before anyone brings up self-determination, let me ask where that principle is when it comes to Palestine.
[1]: https://www.wsj.com/articles/how-hong-kong-makes-evading-nor...
[2]: https://www.nytimes.com/2022/03/02/us/politics/russia-ukrain...
[3]: https://inews.co.uk/news/government-accused-of-absurd-sancti...
[+] [-] dukeofdoom|4 years ago|reply
[+] [-] singularity2001|4 years ago|reply
What would have been the alternative (after the invasion started)? Targeted complete sanctions against the government and all enablers for sure, but would that be enough?