Comments by "Louis Giokas" (@louisgiokas2206) on "China Observer" channel.

  1. In the US, when buying a new construction home, one puts down a deposit, but the mortgage does not start until the home is completed. Another difference is that the lender and purchaser both have liabilities. Typically, whether new construction or existing home, if you can no longer pay the mortgage, the lender takes possession of the home. You may lose the equity you have built up, but you then have no further liability. The lender then sells the home to recover the loss. You may, if you have sufficient resources, sell the home before you run out of money to pay the mortgage. As long as you get enough to cover the loan, you may be better off. The system in China is so skewed against the purchaser that I wonder why it was set up that way. Both in terms of the initial purchase and the loss of income scenario, the Chinese citizen is the one who is adversely impacted. The crazy thing is that you don't permanently own the home. In the US you do. My brother is in the home my mother grew up in. It has been in the family over 100 years. I feel very sorry for the Chinese people. The reality the real estate sector will never com back. The country is already overbuilt, and the population is shrinking.
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  2. I recently upgraded from an iPhone 7 to an iPhone 15. I know, a long time. I was in a phase of upgrading all my tech. The 7 was working fine, but the battery was finally starting to go. I realize I could have had the battery replaced, but I figured it was time for a change. As for Huawei "leading the way", I hope people in China realize that they are one of the biggest thieves of other people's intellectual property.
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  3. Decoupling from the Chinese economy is the prudent thing to do. All indications are that China is headed for a fall. Those that do not find other markets will be badly affected.
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  4. I have a friend who is a high level macro economic advisor. He always said that he hoped that Xi would get a third term, because he would then destroy the Chinese economy. This friend would not invest in funds that have any direct exposure to China in Asia. From close observation over the last few years, and echoed in your reports, this is happening very quickly under our very eyes.
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  5. It seems that many companies are moving to the US, among other places. I recently bought three pieces of battery powered lawn tools of a Chinese company. Two of the three were made in Vietnam. I looked at the company website and found they were also opening up a factory in the US. The US has cheaper energy than Europe, so many energy and hydrocarbon-based industries from countries like Germany are relocating plants to the US. Industrial plant construction in the US is off the charts. Add to that the advantage that the US has in natural resources and agriculture, and China is toast. Another way that China hurts itself is in not allowing foreign companies to create wholly owned subsidiaries in China. This is madness and is typical of developing countries. By the way, India does this too, and it that holds them back. The only things in their favor are a large potential market and inexpensive labor. This is very much like China was. Their big advantage is that they do have a democratic rule of law-based society, so they will do better. Back to China, this restriction on foreign ownership makes it easier for foreign companies to move out. They only have half ownership (actually only up to 49%, I believe) and thus when they move, they only have half the exposure. The local Chinse company is left holding the bag. China created this mess for themselves. Add to that Xi's inconsistency in policy and his aggressiveness towards the west, his best market, and you set the stage for disaster.
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  6. I notice that in your report, the US companies mentioned cashing out of China are selling to hedge funds outside of China. Thus, they can be paid outside of China and actually get their money out. Any company selling to a Chinese company risks not being able to take the proceeds of the sale out of China. This further depresses the value of these holdings.
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  7. A humanities major. She is doomed from the start. The same thing happens in the US.
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  8. This mania for laying off older workers is suicide for the Chinese economy. These people (especially 45 and above) are at the peak of their skills. This is even true for industrial workers in skilled positions. They are also important for capital formation. They make good money and invest for their retirement in more productive assets. Once they retire, they convert their investments into instruments like bonds. Of course, this applies to "normal" economies around the world. It is cleat that China is not a "normal" economy. Just to give an example, in the 1990s, in the US, many big companies offered their employees 55 and older early retirement. They topped up their retirement accounts. They did this to lower their retirement liabilities. Then, they discovered that they needed these experienced employees and hired them back as consultants, at a much higher compensation.
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  9. China's agricultural land is far less productive than that of the US and many other countries. It requires far more inputs. Actually, Brazil is in a similar situation, only potentially worse. Disruptions in world trade will affect both China and Brazil greatly. One must not forget why the one child policy was implemented. The fear of the CCP was that their growing population would be a detriment to their rule because of their inability to feed it. Opening up and allowing massive food imports helped. The one child policy has condemned China to demographic collapse. That is not a strong position from which to threaten the world. A country that imports a large amount of food and industrial inputs from far away is in no position to take over the world. China's navy is in no position to guarantee these inputs will flow freely. That also assumes that other countries will still want to send them.
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  10. I truly feel for the average Chinese person. I have often held that in northeast Asia the Chinese people were the closest in temperament to the US, and a natural ally. That is, of course, before 1949. On the other hand, the horrible things done by the peasants to other Chinese people, both during the revolution and during episodes like the Great Leap Forward and the Cultural Revolution, have shaken my attitude. The fact that the two biggest Marxist revolutions took place in countries with a large rural peasant population would have surprised Marx. His assumption was that the revolution would start in industrialized societies with a large proletariat. He was thinking of Germany, the US and UK. There were attempts in these places, but they did not go that far. There are lots of reasons he was wrong, but the main reason was his understanding of people. Considering his personality, this is to be expected. Life in an industrial society, in cities, is far better than life in the country, especially in the period we are talking about. Actually, it is basically true today as well. So, while the proletariat was not living the high life, it was waaay better than being a peasant farmer, or even a small holder. So, what was done in Russia and China was to appeal to the peasant masses' basest instincts. They would band together and take from the "rich". It was really nothing other than organized theft in which everyone participated. Of course, all this was done under the direction of the Party. Given all this it is no wonder that in both the Soviet Union (and now the Russian Federation) and Communist China that corruption is rampant, and that morality is dead. It is a sad end to a long lived civilization.
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  11. Interesting to hear the sales target for autos in China. With almost four times the population they are projecting selling about 1.5 times the number of cars currently in sold in the US within 77 years.
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  12. I am glad to see the role of organized crime in China spoken about more openly. The CCP is a kleptocratic regime. It is only natural that organized crime would flourish under the regime. This is one of the reasons that my prognosis for China is not a democratic future but for a warlord period like that obtaining after the fall of the Qing dynasty. Such situations are actually common in Chinese history.
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  13. WOW! I have read all Zeihan's books (starting from the last one), and you have presented his arguments well. I happen to agree with his assessment and have even tried to make him aware of your channel through comments on relevant videos. I have been watching your, and other, channels regarding China for a while now, and it always seemed like his predictions were coming true in real-time. Great work.
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  14. The insanity of the CCP system never ceases to amaze me. In most economies, the workers above 35 are the most productive. The Chinese companies are throwing these resources away. In addition, from a capital formation point of view, this cohort is at the peak of their investment years. In real economies they are the ones taking risks and investing for their futures. Almost everything the CCP and Chinese society has done in the past several years has been detrimental to their own people and prosperity and is making China a pariah on the world stage. China needs to decide. Become an open, capitalist society, or sink back into communism and isolation. It is clear that Xi and the CCP want the later. It is a disaster for the Chinese people.
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  15. This is also the case in the rest of the world. Earlier in the Millennium I was living in England. I was in the south and it was a corporate executive job. That means I had my housing paid for me. I found a nice house within my allowance. Frankly, it was comparable to the one I had just sold in the US (to upgrade) and it cost well over twice as much. I live in a top tier city in the US. What I am saying is that housing prices in the south of England were outrageous. At the same time, I had a guy working for me who was located in the old industrial and coal mining north. He told me about a program where you could buy a house (a multistory townhome) for 50 pence. So, we joked. Should I buy a candy bar or a house?
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  16. The repair shop segment is interesting. I did analysis a few years ago for an engineering publication comparing EVs to ICEs. The purchase cost difference between the two types made the EV still more expensive with gasoline at $4 per gallon. The battery replacement issue and quality issues were not even a factor. Add the cost of battery repair or replacement, and the EV is not a viable option. Compare refueling an ICE with charging an EV, and the ICE comes out even better. Also, consider that with an ICE, if I run out of fuel, I can carry enough fuel, if I have to, in a simple can, to go 25 miles or more. Try that in an EV. I am pretty sure that spontaneous combustion is not an issue as well.
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  17. China has never been that powerful, and it has not been technologically advanced for several centuries. Over the last two hundred years or so, China's external trade was effectively controlled by small European countries and Japan. The last time China projected power was in the 15th century. They are also totally dependent on foreign inputs for their industries and food production. If the west is forced to isolate China, they will starve in short order. They will also deindustrialize. As a market, China is a joke, and is in rapid decline. So, yes, they need to show some humility.
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  18. On this topic I see a lot of college grads with degrees in "soft" fields in the reporting from China. This surprises me. I was taking some graduate classes in statistics a few years back and there were lots of Chinese students. Some would admit they would prefer to be studying something else, like marketing, but their parents insisted that they go into a STEM field. Sound advice, actually. The issues these Chinese grads are facing are the same as in the US, but the job market here is in much better shape than in China. So, while they may not get a job in their major, they can get a job. Frankly, there are too many people with these non-core majors that, as the second girl in the video found out, just about anyone can do without the degree. Many of these fields have no place in a university curriculum. Copywriting, entrepreneurship and similar are really only valid in a vocational business school. What the universities, in China and the US, have done is to offer these inappropriate subjects to expand their market. That is all. They dupe people like the woman in the video.
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  19. The Chinese are finally starting to understand that real estate, like all other forms of investment, exists in a market. The price can go up, and down. They are also seeing that the demand is tightly connected to employment. When I first moved from the east coast of the US to the Midwest, some 30 years ago, it was during a recession. I looked at 200 homes in a generally booming suburban city. Over half of these were empty. I took notes on about sixty I thought interesting. This is how things work. The expectation that house prices always go up is unrealistic, especially in inflation adjusted terms or compared to average income. In the last 25 years, the price of my current home has fluctuated wildly. From the initial purchase price it rose by about 40% in about eight years. Then it fell by about a third. Now it is back to its high-water mark. This is how things work. The Chinese expectation that housing would always go up was always unrealistic. If the CCP would allow a real market, the prices would be much lower.
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  20. Listing all these ties and accomplishments between China and Argentina might be the best reason for decoupling. With all that has happened between the two countries, for Argentina to be in the shape it's in means that the relationship between them has not really brought great benefits to Argentina. This is actually true of many of China's trading partners. I know people will say that Argentina's problems are not all China's fault, but perhaps Argentina should look elsewhere for partnerships. Many nations and companies have done so and prospered.
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  21. Tesla has the correct approach. Just look at it this way, humans, who can be very good at driving, use just their eyes as a sensor. The potential problem with humans has nothing to do with their ability to drive or any deficiency with their sensors. Problems generally arise when the human is distracted, takes attention away from the road (my car, an ICE vehicle, actually has a sensor that warns me if I am doing that), or just does something dumb (not an unusual occurrence). The idea of a self-driving car is to avoid these shortcomings. Huawei's approach requires the fusion of many sensors. I have worked with this in the aerospace environment and have taught it in technical courses. I know how difficult it can be. Considering the level of technology in China vs. the west, I doubt they can do a credible job.
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  22. I love the absolute ignorance of the taxi driver (but I don't disparage him) starting about 2:50. He talks about the People's Daily and how it should be the voice for the people. Like most people in communist countries, he is totally brainwashed and ignorant of history. The CCP does not care about "the people". They never have. If they had, there would never have been a Great Leap Forward or a Cultural Revolution with their massive death tolls. Compared to what the CCP has done to the Chinese people in their reign, the genocides in the west are as nothing (and I don't minimize those, they were horrendous). So, here we are in the 21st century and this poor Chinese man, living the life he does, has an expectation that the propaganda organ of the CCP should be "for the people". That is the saddest thing of all.
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  23. The rant at the beginning of the video is quite true of other companies as well. One of the worst offenders is Walmart. Many quality US manufacturers moved their production to China because Walmart pressured them to lower prices. Quality suffered greatly and it adversely affected many brands. Believe me, I have seen it up close.
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  24. If I remember correctly, Jack Ma got into trouble precisely because he pointed out the inadequate nature of regulation of the financial system, including shadow banking.
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  25. Great video! The idea of China building such a large army, and military in general, is really rather silly. NO ONE is going to invade China. China has no capability to project its army over water. Their only use would be against enemies along its land borders. You mention the Indian army, but it is much more capable than the Chinese army and has lots more experience. Now that it is receiving western equipment, the Chinese will be at a distinct disadvantage. As I like to say, China is toast.
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  26. The idea of educating people is to improve the society. If you are encouraging people to do manual labor with a college degree, then you are lost. Not only were lots of resources spent to educate the person, but then their contribution is minimal.
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  27. How can there be labor strife in the "workers' paradise"?
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  28. I have always maintained that, of East Asian peoples, the Chinese are the closest to the west. I mean here the people, not the government. Just look at Taiwan. Japan and Korea rely on government intervention and tend to have large conglomerates. The Chinese have always seemed to have a more entrepreneurial spirit. China, free from the CCP and working within the rules based international system, could be a great contributor. Let's hope it happens soon. Otherwise the world may well become used to not dealing with China, which would mean dire things for the Chinese people.
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  29. A college degree in "tourism management"? This is madness. This is not a topic for a traditional bachelor's degree. This is the type of subject that should be taught in a business vocational school. We would put this in a junior college. It is at most an associate's degree level. This is a problem in the US as well. A lot of the people with student debt in the US have such "useless" degrees. They take on debt that will result in careers that would rarely allow them to pay it back. Even for those that can pay, or did not take out loans, the percentage of people working in fields that had nothing to do with their degree is, I believe, at about the 50% level. Add, on top of that, the issue of needing connections in China and you have a perfect storm of hopelessness.
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  30. Don't forget where the CCP came from. The CCP is a Marxist-Leninist party. The funny thing about where Marxist socialism, or communism, or whatever you want to call it, has been successful is that Marx did not predict it (he was wrong about so much). The main countries were Russia and China. Both were mostly peasant societies. He assumed that the revolution would come in advanced industrial societies with a developed industrial proletariat. He was thinking about countries like Germany, the UK and US. Those countries with a peasant economy would have to go through stages of development to bring them into the conditions for revolution. So, why did Russia, then China, become the first major communist countries? Because the revolutionary leaders promised the peasants free stuff. That stuff was, of course, taken from the bourgeoise. They played on the greed of the people. These are the people of China. I say all this because the society of China, as well as its leaders, are thoroughly corrupt. Does the CCP organize the massive counterfeiting in China? The CCP is involved in a lot of the IP theft, but not all of it. How about all the poor-quality goods and outright poisoning of the environment? The man who starts speaking at about 1:45 is correct in what he says, but he leaves out that these private business owners as well as all the CCP officials they have to deal with, are probably corrupt. Also, the people protesting at the beginning of the video are dreaming. They fled. They are in the US where they can say those things. They are kidding themselves if they think China can become like the US. Just look at what happened in Russia after the collapse of the Soviet Union. That is China's fate, with competing warlords. That is Chinese history.
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  31. This tendency for Chinese companies to branch out into businesses where they have no background is a bad thing for the Chinese economy. We call such companies conglomerates. They were once fashionable in the west, but have become, rightly, unfashionable.
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  32. Lots of good responses. Don't forget the USSR pushing the idea of the "new Soviet man". This is what it turns into.
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  33. The ineffectiveness and corruption in the Chinese semiconductor industry is one of the best arguments for the superiority of the free-market capitalist system over state capitalism. There are lots of others. Ever wonder why the Soviet Union or the Soviet bloc never developed this industry? Same reason as in China today. Considering that Xi is moving the country to a fully state controlled economy, the outlook for China is grim.
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  34. The Chinese are finding out how markets and supply and demand work. I have been in a house for 25 years. From my original purchase price, it eventually rose about 75%. Then, it fell by 35% from that peak. It is currently back up to the peak. This is in nominal terms. That's just how it is with housing. A lot depends on external macroeconomic factors and financial factors such as interest rates. The issue in China is that the market was manipulated by the government for so long that many people will be adversely affected. In addition, the government provided few alternative investment avenues to the average person. This also distorted the market.
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  35. The CCP policy of foreign companies needing to have joint venture partners is coming back to bite them. This policy actually makes it less costly for companies to exit China as the capital lost is less than if it were a fully owned venture. In the US, companies like Honda actually can own the factories without local partners. The plants they are building in the US with partners are not driven by policy. Those plants are being built to service a particular company in the US or Canada.
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  36. "I was supposed to make a profit..." I don't know if it the translation, but that is one of the stupidest things I have ever heard. This is the same type of thing I hear when we see all those people who invested and lost their money protesting. Even in the US, the only things that are "safe" are government bonds and savings accounts. In all the advertising for investment products, the caveat that a total loss of principle is possible. The only place you don't see that is in the YouTube videos hawking stocks (especially Tesla). It is probably the result of a population that lived under communism for so long. When exposed to capitalism and markets they seem to be deluded, and frankly, ignorant. This also happened in Russia. The only way people made real money was through corruption and gangsterism.
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  37. It is good to see that people are starting to pay attention to the treatment of labor in China. Between that and the pollution issue, what companies have done is to export practices that they would not accept at home. It is true that the Chinese are directly responsible for the abuses, but this is facilitated by western investors and companies. I actually ran into an example that melds both of these problems. I was at a meeting where a Chinese industrialist, a family firm, was in the US soliciting business. One American who wanted a product made in China was asked if he wanted air filtration in the plant to protect the workers. If he said yes that would increase the cost. He said no.
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  38. China does not export coal. In fact, it imports coal. As for rare earths, they are not rare. Before China became involved in processing them, the US had its own source and processing. The thing about this process is that it is environmentally "dirty". Thus, as with much other materials processing, the pollution was simply shifted to China, which does not enforce standards, thus lowering the cost. These are not advantages for China. In a real war scenario, it would be trivial to strangle China of resources. China imports massive amounts of oil and food, as well as many other commodities. China would be back to the state they were in around the time of the Great Leap Forward, including the starvation.
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  39. The mismatch in university graduates with the jobs that really drive the economy (engineering, finance and manufacturing) is also evident in the US. A lot of the student loan debt that is problematic is owed by people with useless degrees. These degrees are fine for people whose families are already wealthy enough to pay for education, but borrowing to get such degrees is madness on a societal level. Years ago I met Chinese students in graduate programs in the US in fields such as statistics or engineering who really wanted to do something else. At least someone was smart enough to pressure them to get a useful degree. That seems to have gone by the wayside.
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  40. A new order dominated by China and Russia? These are two countries that may well not exist in their current forms by the end of this decade. Between demographic collapse and political instability, they both are looking into the abyss. So, good luck with that. As for Europe having strategic autonomy from the US, dream on. In fact, it is Putin who is driving the US and Europe closer together. This includes tighter economic integration as well. There are lots of alternatives to Russia and China in terms of both raw materials and manufacturing. The shift away from Russia and China is already underway.
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  41. I recently bought three battery powered lawn tools from a company that was started in China. Two of the three were made i Vietnam. Looking at the company website, they are also starting to manufacture in the US. This is real. This is happening.
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  42. WOW! A very thought-provoking video. Well done! One more thought on communism in China, and generally. Marx assumed that the revolution would be driven by the urban, industrial proletariat. He assumed that it would start in countries like Germany, the UK and the US. Instead, it started in countries that were industrially underdeveloped with large peasant populations. Specifically, Russia and China. This is what allowed them to control the populations. They were used to being controlled. Of course, Marx's reasoning was all wrong. The people of Russia and China were offered free stuff, taken from the middle and upper classes. They were not really ideological. In the countries where Marx expected the revolution the people aspired to create wealth. Many of the wealthy in the US these days, and historically, did not come from highly privileged backgrounds. Even the average factory worker has it fairly good. Frankly, having traveled a bit, I have concluded (and I am not alone in this) that our lower classes would be considered middle class in most of the world.
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  43. I have to disagree that massive population is a source of power and strength. First, the actual data from current economic performance and second from historical events completely contradict this. Just look at per capita and total GDP for countries around the world. China and India have a third of the world's population, but only 20% of world GDP. The US generates 25% of world GDP but has about a tenth of the population of China and India combined. The growth rates that China and India would have to sustain to catch up in per capita terms is astronomical. It certainly won't happen this century. Both countries are also putting lots of their resources into the military and space exploration. At their levels of societal development this is a poor use of resources. Both countries have hundreds of millions of people in poverty and these activities will not help change that. From the historical point of view the data is even more striking. Neither China nor India have spent most of their long history as fully unified states under strong central control. Much smaller European countries dominated China and India over the last many centuries. The last time China built a strong fleet and projected power was in the 15th century. India was completely taken over and ruled by the UK, a country with a fraction of the population. Japan invaded China in the 1930s with a much smaller population and took over massive amounts of territory. The actual history and current data show that rather than an asset, massive populations are a detriment.
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  44. Great work! The only saving grace is that China's banking system is not integrated into the global system.
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  45. Fascinating! Perhaps this is the only thing China is really capable of producing. This story aligns with all the other reports of embezzlement in China's state owned and funded chip manufacturing initiatives.
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  46. Why would the workers need labor unions in the "worker's paradise"? Such a silly idea.
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  47. At about 15:30, your characterization of the conflict with Vietnam in 1979 is, at best, problematic. I have nowhere heard that this was a "win" for China. In fact, it is always characterized as a defeat for China.
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  48. Very interesting report. There is lots of good information here. The idea of Taiwan turning things around and leading a struggle against the CCP seems far fetched at first. Then, if you think about it, it makes sense. Don't ever forget that after the Qing dynasty fell China went into one its warlord periods (of which there have been many) and that Mao was just one of the warlords. Taiwan is much more successful that China in the world economy and for its people. Another thing I saw that tends to support the idea is an item I saw on a channel that has since disappeared. The claim was that there were people in Shanghai that wanted to leave the clutches of the CCP and ally with Taiwan. This type of thing is not unprecedented in history. There has always been tension between the wealthy cities in the coastal south and the central authority. As for the statements made at about 9:30 all I can say is balderdash. This whole idea of maintaining themselves with land routes through the Eurasia is the biggest load of propaganda that one can imagine. Remember the original Silk Road? It was long, dangerous, limited and costly. That is what spurred the European powers to develop their sea power and economy and eventually to dominate Asia. Just look at the size and population of the European peninsula and east and south Asia. Look at it. For hundreds of years this small landmass has dominated not just Asia, but much of the world. The important thing to remember is that transport by sea is very cheap compared to land transport and very easy to set up. Pipelines are good only for a couple of commodities by take huge amounts of capital and lots of time to develop. Before China could even negotiate contracts they would be deindustrialized and starving. The primacy of trade by sea is not some sort of western plot to dominate, but is a natural outgrowth of its advantages.
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  49. Have the Chinese noticed that in Ukraine ballistic, hypersonic and cruise missiles have routinely been shot down. The US Navy has the Aegis system which performs a comparable function at sea. In fact, these systems are far reaching and extremely effective.
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  50. Industrial chains take decades? Come on man. None of the factories mentioned were 40 years old. They had their "industrial chain" developed at the beginning of that time, not the end. I am aware of a factory that had been set up in the US, in the outer suburbs (sometimes called exurbs) of a large city where the company was located. In the 1990s the factory was quickly relocated to China. This trope about taking decades or generations is all bunk. Factories are constantly changing, and the critical part is the machinery, not the location. The massive transportation system that allowed China to play on the world stage is one of the most flexible and responsive systems ever conceived. As noted in the video, many of these industries were low skilled. Many of the workers are really peasants (nothing against them) that came to the cities like Dongguan to find work. In addition, many of those industrial chains were created by and managed by foreigners. These are smart and innovative people. Moving a factory, for them, is a challenge and is probably welcome by them personally.
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