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Bulletins and News Discussion from March 10th to March 16th, 2025 - The New World Struggles To Be Born; Now Is The Time Of Proxy Wars - COTW: Myanmar

Image is from Wikipedia's article on the war..

I've wanted to cover Myanmar for a while now but haven't had the needed knowledge to write much more than "This situation really sucks." After doing a little reading on the situation, I feel even more confused. A decent analogy is the Syrian Civil War, at least while Assad was in power (though it's still pretty true today) - many different opposition groups, some co-operating with the United States, others not. The main government supported partially by an anti-American superpower, but who could live with that government collapsing if there are deals to be made with the group coming into power. A conflict kept going and exploited at least partially by the United States and other imperial core powers, though with plenty of genuine domestic animosity and desires for political independence.

Recently, the Myanmar government - the mainstream media uses "junta", which is probably accurate despite the connotations - has promised elections at the end of 2025. This doesn't seem likely to happen, and even if it did, how this would work in a country as war-torn as Myanmar is unclear. The government is losing territory and soldiers at a quick pace; they now hold only 21% of the country, though that 21% does at least comprise many of the cities. It's difficult to get a handle on the number of people affected because civil wars and insurgencies have been ongoing in some shape or form for decades, but we're talking at least millions displaced and thousands of civilians killed.

Here's a comment by @TheGenderWitch@hexbear.net from fairly recently that covers the situation in Myanmar:

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  • https://xcancel.com/Sino_Market/status/1901218030488887431

    @xiaohongshu@hexbear.net What's your take on this? I remember you mentioning that China should go all in on its domestic market to solve some of its problems. Is this action plan to raise wages and boost domestic demand accurate?

    • Yes, this is pretty much the same as the NPC work report that I posted the summary of ~2 weeks ago.

      First of all, there is undeniably a low consumption problem (I still get some Westerner leftists trying to argue with me that there is no consumption problem in China, which is very strange considering all levels of government have already placed it on their top economic priority) and equally undeniable that there is a strong political will to solve this problem. It is also undeniable that the Dual Circulation strategy (balancing external circulation i.e. trade with internal circulation i.e. consumption) that the government proposed a few years ago has failed: we ended 2024 with record trade surplus and slumping consumption.

      A key difference from this year’s expenditure from the standard IMF recommendation of 3% to 4% (+1.6T yuan deficit spending), which will almost certainly improve the spending deficiencies we’ve had in the last couple years, but the question is if this amount is adequate to restore consumption confidence (for the record, the US has been deficit spending 6-7% annually in the past couple years, which is the main reason that the US hasn’t gone into recession yet, even taking into account that a lot of the spending went into the top 10%, who has now made up of ~50% of consumption in the US today).

      Furthermore, we still don’t know if this increase in deficit spending is a temporary measure or will they permanently enlarge the deficit and keep it above 3%. Many countries temporarily increase deficit spending during recession (Keynesian-esque policy) but will go back into austerity as soon as the situation stabilizes. And honestly, 4% is still too conservative compared to what the US has been spending, so only time will tell if this measure will actually work.

      Perhaps more important is the fact that all these spending are still financed by issuing debt, especially special government bonds and special long-term government bonds. In other words, the deficit spending does not come from the creation of net new financial assets (direct money creation by the central bank), but that the central government “borrow” from financial institutions and the private sector and promise to pay back interests in the long term.

      Why a government that issues its own currency needs to “borrow” from the private sector? The only logical answer is ideological indoctrination rooted in IMF-style policymaking.

      This will always be a critical problem for China because it still hasn’t found a way to resolve its debt issue through cancelation. The 12T yuan “debt settlement” plan from last November revealed this mentality as much: 1) raise the debt ceiling of local governments by 6T yuan so local governments can borrow 6T yuan more from the banks at lower interest rate to pay back their outstanding high interest hidden debt; 2) issue more bonds (0.8T yuan for the next 5 years = 4T yuan) for debt servicing; and 3) the last 2T yuan of debt due by 2029 will be repaid according to the original contract.

      As you can see, the measure relies heavily on “borrowing new to repay the old” mechanism and this makes the entire economy vulnerable to the Fed rate. As long as the Fed doesn’t lower its rate (which Trump can weaponize), then the local governments in China will not have access to lower interest loans to pay back their outstanding debt. It is also not clear what is the “true” size of the hidden debt since so much of that is off the books and maybe only the central government knows (or maybe even the central government could no longer keep track of that).

      If you know what I have been advocating for, you will know that the central bank can always create the money needed to cancel the debt, as long as they are owed in the currency it issues (yuan). However, because China’s monetary base is heavily reliant on accumulating foreign reserves and collateralizing existing assets, the fiscal expansion will still be tied to the dollar and it will have to earn more dollars (either through exports, or attracting foreign investments) in order to create the money needed to resolve the debt.

      The way out is an ideological shift away from the Chicago school neoclassical economics and actually assume full monetary sovereignty. Instead of local government borrowing billions of yuan from the commercial banks to build infrastructure/high speed rails, and bet on the rising land value to repay its debt at some point in the future (spoiler: the property prices crashed, and hence the land value as well), the central bank can simply issue the currency needed to finance the infrastructure building, cutting out all the financial institutions middle men etc:

      Central bank creates reserves on commercial banks -> commercial banks create deposits on bank accounts of contractors -> contractors build infrastructure -> central bank then sells government debt to soak up the excess liquidity of commercial bank reserves (pumped into by the central bank itself) to prevent the interest rate from being driven down to 0% (and only if the central bank chooses to target a specific rate, otherwise they can just let the reserves build up without issuing any debt at all)

      This bypasses the entire earning foreign currencies, collateralize existing assets, borrowing from banks, borrowing from private/foreign sector through government bonds to build infrastructures etc.

      Feel free to read my long post where I explained in more detail how China’s government financing works responding to one of our posters’ question the other day, and it will become clear why China’s local governments are mired in so much debt that it can’t repay today.

      • XHS, I've been keeping up with your China watching and I'm gonna make a very layman prediction.

        If China is too enmeshed in Chicago style economics as well as a serving as factory of the world, then it will take a major socioeconomic crisis for the CPC to hit the socialism button.

        Considering PRC is willing to trade with anyone whose willing to trade with them, I imagine this as a US major escalation. Whether there's direct warfare, proxy war in Taiwan or Myanmar, or a full on sanctions war like with Iran and Russia, the US and West will do something that means China can't rely on trading with them as their major economic engine.

        This will cause an economic crisis and drop in living standards for the Chinese people at large and only then will the PRC make a drastic economic change. They have the physical capital and technical expertise that Deng desired, but the CPC isn't willing to gamble with the prosperity of their people to fully break with capitalism.

        But in a Western aggression scenario, they'll have the ideological and pragmatic justification to reorganize the economy to remove neoliberal rot.

        I'm curious what you think of this theory.

        • I was hoping the Ukraine war would be the catalyst for such radical transformation, which would have fit into Xi’s broader approach towards suppressing private capital especially the financial economy (e.g. Alibaba’s Jack Ma).

          For a while, if you remember back in the summer of 2022, there really seemed like something significant was going to happen. Russia canceled $23 billion of Africa’s debt in August 2022 amidst the sharp Fed rate hike, then China also waived the interest for its loans to a number of African countries.

          Ultimately nothing really happened and it seems that China eventually did not want to get on board with the whole dedollarization plan (for reasons I’ve already stated) against Putin and Lula, the two BRICS member states who were calling for it.

          It is difficult to predict what’s going to happen with the party, even under an economic crisis. The June 4th incident (aka Tiananmen Square incident) in 1989 demonstrated that the government would rather prioritize stability over chaos, even in the face of international media. The traumatic scars of Cultural Revolution still lingered. It should come as no surprise that many of the CPC leaders in the reform era have been victims of Mao’s Cultural Revolution.

          After the June 4th incident (which I remind you, started because of students protesting the loss of job guarantees after graduation as the industries were being privatized at the time), the party fractured into two opposing factions: the conservative hardliners (represented by Chen Yun) who wanted to stop the liberalization and turn back to the Maoist planned economy era, and the liberal reformists (represented by Deng Xiaoping) who insisted on resuming the liberalization of the economy.

          Deng was driven into retirement after the June 4th incident (and mostly because he screwed up the 1988 price reform policy which led to inflation and the buildup towards the 1989 incident) and Jiang Zemin (Chen Yun’s protege) became the next General Secretary of the CPC. However, Jiang’s lifelong career at Jiangsu/Shanghai made his position relatively shaky up north at Beijing. Deng came out of his retirement during his infamous Southern Tour in 1992 and during one speech at Wuhan, he publicly stated that “anyone who opposes the reform will have to be stopped by any means necessary.” This culminated in the 1992 Zhuhai secret meeting where senior party officials and military generals secretly met with Deng without the authorization from Beijing, and Qiao Shi (Deng Xiaoping’s protege) was slated to replace Jiang Zemin if a coup was to proceed.

          Jiang Zemin backed down, and the liberal reform was to proceed unperturbed. The ideologically fervent Marxists in the CPC were effectively out of power by the 1990s. When China joined the WTO in 2001, it was mostly a neoliberal fest. Xi is interesting in that he seemed to walk in between the two, seemingly trying to reverse the course of the neoliberal trajectory (it was either him or Bo Xilai, who was Jiang Zemin’s protege and arguably a more hardcore Marxist until his corruption scandal led to his downfall). Xi was heading the endeavor to stop the encroachment of private capital, especially financial companies, and most prominently when Jack Ma’s Alibaba was attempting to interfere with governmental policy making. But he may be fighting against very entrenched liberal factions at all levels of the government. The recent return of Jack Ma at the highest echelon meeting with the business leaders showed just how powerful the private sector has become.

          So I cannot tell you what’s going to happen. In many ways, as someone who has tried to learn as much as possible about the party, it is still by and large a very opaque bureaucracy. Things may suddenly change for the better, or they could get worse without any notice.

    • Quoted here:

      ~~🇳JUST IN #CHINA'S STATE COUNCIL AND CPC CENTRAL COMMITTEE ISSUE "ACTION PLAN TO REVITALIZE CONSUMPTION" TO BOOST DOMESTIC DEMAND.

      ACTION PLAN FOCUSES ON INCREASING INCOMES, IMPROVING CONSUMPTION CAPACITY, UPGRADING SERVICE QUALITY, AND OPTIMIZING CONSUMPTION ENVIRONMENT.

      🔸FIRST MAJOR INITIATIVE: PROMOTE URBAN-RURAL RESIDENT INCOME GROWTH. MEASURES INCLUDE RAISING MINIMUM WAGES, EXPANDING WORK-RELIEF PROGRAMS, AND CRACKING DOWN ON WAGE ARREARS FOR SMES.

      PLAN AIMS TO BROADEN PROPERTY-INCOME CHANNELS BY STABILIZING STOCK MARKETS, EASING LONG-TERM CAPITAL MARKET ACCESS, AND STRENGTHENING STATE-OWNED ENTERPRISE MARKET VALUE MANAGEMENT.

      AGRICULTURAL INCOME BOOSTS: IMPLEMENT GRAIN FARMER SUBSIDY MECHANISMS, PROMOTE "THREE PRODUCTS, ONE STANDARD" AGRI-PRODUCTS, AND DEVELOP RURAL TOURISM/ECONOMIES.

      🔸SECOND INITIATIVE: ENHANCE CONSUMPTION CAPACITY. KEY MEASURES INCLUDE INTRODUCING CHILDCARE SUBSIDIES, EXPANDING EDUCATION/HEALTHCARE RESOURCES, AND RAISING PENSIONS IN 2025.

      MEDICAL REFORMS: FULLY IMPLEMENT PERSONAL PENSION SYSTEM, REMOVE HOUSEHOLD REGISTRATION BARRIERS FOR FLEXIBLE WORKERS' INSURANCE, AND EXPAND OCCUPATIONAL INJURY COVERAGE.

      🔸THIRD INITIATIVE: UPGRADE SERVICE CONSUMPTION. PROMOTE ELDERLY-FRIENDLY INFRASTRUCTURE, COMMUNITY-BASED CHILDCARE, AND HOME SERVICES INDUSTRY STANDARDS.

      TOURISM BOOST: EXTEND SCENIC SPOT OPERATING HOURS, SIMPLIFY EVENT APPROVALS FOR NATIONWIDE TOURS, AND LAUNCH ICE AND SNOW TOURISM PROMOTION PLAN.

      🔸FOURTH INITIATIVE: UPGRADE MAJOR CONSUMPTION. IMPLEMENT NATIONWIDE TRADE-INS FOR CARS, APPLIANCES, AND SMART DEVICES WITH SUBSIDIES. SUPPORT SECOND-HAND GOODS MARKET DEVELOPMENT.

      HOUSING MEASURES: ACCELERATE URBAN VILLAGE RENOVATION, ALLOW SPECIAL BONDS FOR GOVERNMENT HOUSING PURCHASES, AND EXPAND HOUSING PROVIDENT FUND USAGE FOR RENTAL/PURCHASE.

      🔸FIFTH INITIATIVE: IMPROVE CONSUMPTION QUALITY. DEVELOP "CHINA SERVICE" BRANDS, PROMOTE CULTURAL IP PRODUCTS, AND ACCELERATE AI+ CONSUMPTION IN AUTONOMOUS DRIVING/WEARABLES.

      SUPPORT LOW-ALTITUDE ECONOMY: DEVELOP TOURISM/DRONE CONSUMPTION, STREAMLINE YACHT REGISTRATION, AND ENRICH CRUISE ROUTES.

      🔸SIXTH INITIATIVE: OPTIMIZE CONSUMPTION ENVIRONMENT. ENFORCE PAID LEAVE RIGHTS, LAUNCH 3-YEAR CONSUMER PROTECTION CAMPAIGN, AND CRACK DOWN ON FAKE PRODUCTS/UNFAIR PRICING.

      IMPROVE RURAL-URBAN DISTRIBUTION: BUILD COUNTY-LEVEL LOGISTICS HUBS, UPGRADE NIGHTTIME CONSUMPTION INFRASTRUCTURE, AND DEVELOP IMMERSIVE RETAIL SPACES.

      🔸FINAL INITIATIVE: REDUCE CONSUMPTION RESTRICTIONS. BAN "ONE-SIZE-FITS-ALL" POLICIES, EASE AUTO PURCHASE LIMITS FOR LONG-TERM LICENSE PLATE LOTTERY PARTICIPANTS, AND SUPPORT TRADITIONAL FESTIVAL ACTIVITIES.

      PLAN EMPHASIZES CROSS-DEPARTMENT COORDINATION AND LOCAL GOVERNMENT IMPLEMENTATION TO ACHIEVE CONSUMPTION-LED ECONOMIC GROWTH.~~

    • Seems pretty based tbh

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