However, this indefinite freeze on Russian assets is not a sudden measure, but rather a gradual institutional arrangement. Following Russia¡¯s military invasion of Ukraine in February 2022, the US and EU jointly froze approximately in Russian overseas assets. Of this, the EU froze approximately €210 billion worth of assets belonging to the Russian Central Bank.

Previously, the West adopted a limited, temporary sanctions framework targeting specific individuals and entities, which required the unanimous consent of all 27 EU member states every six months for extension, and effectively granted each member state veto power based on equality. This highly institutionalized constraint enabled the Russian central bank to maintain financial stability to some extent, despite sanctions, through such as interest rate adjustments, capital controls and a shift toward Asian markets.

The three-tiered approach

In stark contrast to previous approaches, the EU has devised a three-tiered, progressive plan for the frozen Russian assets. The first tier is the risk profit extraction mechanism. Faced with significant legal obstacles to directly confiscating the principal, in February 2024, the Council of the European Union the ¡°risk-profit¡± mechanism, which prohibits financial institutions from repatriating interest to Russia and establishes an independent accounting system to redirect it to support Ukraine.

Between 2024 and 2025, the EU used this interest to pay approximately to Ukraine. While this ¡°moderate¡± approach avoids the legal obstacles of ¡°confiscating the principal,¡± it also reveals a fundamental contradiction: the original trusteeship agreement stipulated that the interest belonged to the Russian Central Bank. That is to say, how can the sanctions override the ownership agreement of the assets?

The second tier: a compensation loan mechanism. The EU proposed providing Ukraine with ¡°compensatory loans¡± secured by frozen assets, to be repaid only after Ukraine receives war reparations from Russia. Given the loan¡¯s 45-year term, one could reasonably assume that Russia is unlikely to pay war reparations in the foreseeable future. Therefore, the loan is de facto equivalent to a quasi-confiscation of assets. In other words, the EU is attempting to ¡°replace¡± the permanence of the transfer by extending the timeframe.

The third tier: the resolution to freeze indefinitely. EU¡¯s resolution passed on the 12th of this month constitutes a triple breakthrough: First, it breaks the principle of ¡°unanimity¡± and adopts a specific majority vote (25:2), this means it directly abolishes the veto power of certain member states; second, it invokes of the EU Treaty (originally an internal mutual assistance clause for dealing with natural disasters/epidemics) to deal with the sovereign assets of other countries, which is a distortion of the function of the clause; third, the introduction of the concept of ¡°indefinite¡± eliminates the legal premise of temporaryity and reversibility, turning it into permanent control.

One of the main reasons that the EU takes such radical measures is to alleviate Ukraine¡¯s financing difficulties. According to the World Bank¡¯s , Ukraine¡¯s reconstruction costs over the next 10 years are projected to exceed $500 billion. Frozen Russian assets can cover only about 60% of Ukraine¡¯s needs, leaving a funding gap of over $200 billion. Therefore, indefinitely freezing Russian assets was seen as the most direct, fastest and most ¡°reasonable¡± solution.

The financing logic behind the EU¡¯s decision

On a practical level, the EU¡¯s decision undoubtedly poses a systemic threat to the global financial system. The operation of the reserve currency system presupposes institutional trust in the safety of assets by central banks. Freezing and confiscating sovereign assets will destroy this foundation of trust, prompting countries to reassess the foreign exchange reserves held by Western financial institutions. What¡¯s more, it sets a very bad precedent.

Currently, the most important foundation of the international financial order is credit. Central banks around the world store their foreign exchange reserves in Europe and the US, precisely because they believe these assets are absolutely safe.

Historically, no country has taken similar sanctions, even during World War II. Therefore, if a situation arises where Europe uses its holdings of other countries¡¯ assets for other purposes, it could severely undermine confidence in the international financial order, particularly in the European financial system. In other words, if the EU were to utilize frozen Russian assets, especially the principal, the entire Eurozone may face the risk of a collapse in market confidence.

Once trust is damaged, the negative impact could quickly spread to all aspects of the macroeconomy of EU member states. For instance, it could not only reduce global investment in the Eurozone but also severely impact Europe¡¯s future financing needs in areas such as defense, green transformation and digital transformation. Ultimately, it could threaten the euro¡¯s status as an international reserve currency, potentially triggering a liquidity crisis in the European banking system.

Implications for international law and the global order

Beyond its economic implications, the EU¡¯s resolution also represents a challenge to international law and the existing international order by sovereign states (or highly integrated regional organizations): it marks the first time industrialized nations have jointly frozen and utilized the assets of another country¡¯s central bank; the first time domestic emergency provisions have been invoked to address cross-border asset issues; and the first time financial sanctions have been institutionalized in relation to war reparations.

These three factors combined constitute a systemic breakthrough of the existing international order. At a deeper level, this also foreshadows a trend towards a return to the ¡°law of the jungle¡± in the underlying logic of future international relations.

At the same time, this decision has also put related stakeholders in a dilemma. First, the EU might have won a tactical victory in financing Ukraine, but it may face enormous systemic risks. It sets a worrying precedent ¡ª that major powers can break the rules to achieve political goals. Second, for Ukraine, even with short-term financial support, it still faces the risk of a future financing crisis and may ultimately push itself into extremely unfavorable conditions when negotiating with Russia.

Furthermore, Russia¡¯s financial control and international financing capabilities will be significantly weakened, which will simultaneously accelerate its determination to de-dollarize. Even among other developing countries, some may decide to reduce their dependence on the financial system dominated by developed countries.

Russia¡¯s financial response and accelerating fragmentation

According to media reports, the Central Bank of Russia has begun its unfrozen foreign exchange reserves from US dollars and euros into gold and other currencies. It is also promoting the use of its own currency for settlements with major trading partners to bypass the US dollar and euro payment systems.

Simultaneously, Russia is continuously improving (the System for Transfer of Financial Messages, a Russian equivalent of the Society for Worldwide Interbank Financial Telecommunication [SWIFT], developed by the Central Bank of Russia) and exploring the use of central bank digital currencies for cross-border payments. While these measures may be costly in the short term, they represent Russia’s determination to fundamentally counter financial sanctions. They are a response to the ¡°law of the jungle¡± as well.

The EU¡¯s move to freeze Russian assets and attempt to access their principal demonstrates that when international law and order conflict with the interests of major powers, these powers tend to change or ignore the rules rather than constrain their own interests. Ultimately, these actions will further fragment the international order.

[ edited this piece.]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

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Wang Yi¡¯s views were frank and also quite stern; his core intention was to explain to the international community why China had to retaliate against Japanese Prime Minister Sanae Takaichi¡¯s erroneous remarks.

China¡¯s government has taken a hard line

There are at least three points in Wang Yi¡¯s speech that deserve special attention:

First, 2025 is a very special year, marking the 80th anniversary of China¡¯s victory in the Against Japan. Besides, Japan bears a historical ¡°original sin¡± regarding the Taiwan issue. In Wang Yi¡¯s words, returning Taiwan, which Japan ¡°¡± from China, is an international obligation that Japan, as a defeated nation, ¡°must continue to abide by.¡± Therefore, especially this year, Japan should deeply reflect on its actions and adhere to the rules and commitments on the Taiwan and historical issues, acting with caution and restraint, rather than provoking trouble, he says.

Second, Wang Yi pointed out, ¡°But what is shocking is that the current Japanese leader has publicly sent the wrong signal of attempting to intervene militarily in the Taiwan issue, said things he shouldn¡¯t have said, and crossed a red line that shouldn¡¯t have been touched.¡±

Why is this considered a wrong signal? Because Sanae Takaichi broke with the practices of almost all previous prime ministers of Japan, explicitly stating her to intervene militarily in the Taiwan Strait dispute. This clearly constitutes ¡°saying things she shouldn¡¯t have said and crossing a red line she shouldn¡¯t have touched.¡±?

Third, faced with Japan¡¯s blatant infringement upon China¡¯s sovereignty and territorial integrity, and its violation of international justice and human conscience, China seems to have no choice but to retaliate. Therefore, Wang Yi also stated, ¡°The Chinese people love peace and are friendly to their neighbors, but on major issues concerning national sovereignty and territorial integrity, there will be no compromise or retreat.¡±

This indicates that China is unlikely to have any room for compromise on this issue. If the Chinese government chooses to compromise, the surging nationalistic sentiment among 1.4 billion Chinese people could very well shake the foundations of the Chinese Communist Party¡¯s (CCP) rule.

Japan has ¡°no bargaining chips¡± over China on the legal basis

If China were to attack Japan in a future conflict across the Taiwan Strait, it would have a legal basis, namely the 53 and 107 of the UN Charter which stipulate that if a former enemy state launches another invasion, the five permanent members of the UN Security Council ¡ª China, France, the Soviet Union (now Russia), the United Kingdom and the United States ¡ª have the right to directly conduct military action without authorization from the Security Council. Although the Japanese Ministry of Foreign Affairs by emphasizing that these clauses are outdated because UN General Assembly Resolution 50/52 of 1995 declared them obsolete, they remain valid.

This is because the UN Charter has a higher legal standing than any UN General Assembly resolution. In other words, a General Assembly resolution cannot overturn the UN Charter. Even if a country votes in favor of a General Assembly resolution, it can still invoke the UN Charter because it has the highest legal standing. It¡¯s like, if a bill passes a referendum in the United States but violates the Constitution, actions can still be taken according to the Constitution, not the bill itself, unless the Constitution is amended.

The UN Charter, the core of the ¡°enemy state clause,¡± states that when the UN Security Council considers a situation threatening international peace, it may authorize regional organizations or states to take action. However, actions against ¡°enemy states¡± (such as the Axis powers in World War II, such as Germany and Japan) are not subject to this restriction and do not require Security Council authorization. Legally, this clause allowed the Allied powers to take direct military action against aggression by ¡°enemy states¡±, thereby serving as a deterrent to the post-World War II international order.

Article 107 of the UN Charter is also one of the core contents of the ¡°enemy state clause¡±, stipulating that: ¡°This Charter does not abolish or prohibit any action taken or authorized by a responsible government against an enemy state of any signatory State of this Charter in connection with the Second World War.¡± Its core meaning can be understood as: this clause explicitly preserves the right of victorious powers in World War II (such as China and the United States) to conduct military action against the Axis powers (Japan, Germany, etc.), and even after the UN Charter came into effect, these actions remain unrestricted by Security Council authorization. Essentially, this is an ¡°exceptional authorization¡± under international law for the military expansion of defeated powers, aimed at preventing a repeat of the history of aggression.

During World War II, Japan and China were enemies, and Taiwan was also affected during the war (occupied by Japan). Therefore, if Japan were to intervene in Taiwan affairs militarily, it would perfectly comply with the provisions of the clause as mentioned above, allowing China to launch an attack on Japan directly without authorization from the UN Security Council.

Would China dare to declare war on Japan?

However, the key question is, even with these legal guarantees from the UN, would China really dare to declare war on Japan?

Economically, signs of Japan¡¯s downturn have indeed been emerging for some time. In the third quarter of this year, Japan¡¯s GDP for the first time in nearly two years; inflation has continued to rise for consecutive months, already exceeding the Bank of Japan¡¯s warning line; consumer goods prices are soaring while wages are still stagnant; the yen¡¯s exchange rate has been for a long time; plus, the most troublesome problem ¡ª extremely high debt-to-GDP ratio. With all these internal problems unresolved, a diplomatic conflict with China is particularly detrimental at the moment, as China has already begun imposing a slew of economic measures that appear aimed at Japan.

First, the Chinese Ministry of Foreign Affairs immediately Chinese citizens to avoid traveling to Japan. Subsequently, major Chinese airlines announced that tickets for flights to Japan could be refunded free of charge, while several other airlines directly the cancellation or reductions of flights to Japan. Meanwhile, the Hong Kong and Macau Tourism Bureaus also updated their travel safety advisories, reminding those planning to travel to Japan to be vigilant. According to media reports, tens of thousands of tickets from China to Japan were cancelled in just two days after November 15.

Suddenly, Japan¡¯s tourism industry lost its largest source of customers and its overseas consumer group ¡ª Chinese tourists. As a result, the Nikkei index on the Tokyo Stock Exchange began to fall on the morning of November 17, with significant declines seen in sectors related to the Chinese market, particularly those pertaining to Chinese tourist spending, such as Mitsukoshi Isetan (a wholly-owned subsidiary of Mitsukoshi Isetan Holdings, a Japanese department store holding company that primarily operates the Mitsukoshi and Isetan brands in the Kanto region). If the number of Chinese tourists visiting Japan were to decrease by 25%, as in 2012, it would roughly lead to a reduction in spending of trillions of yen, equivalent to nearly 0.5% of Japan¡¯s real GDP. Simultaneously, China also reimposed bans on imports of Japanese and beef.

Still, China has more cards to play, such as launching trade remedy investigations, restricting investments and taking antidumping measures. However, all these moves seem like ¡°sharp pinpricks¡± rather than ¡°a knockout blow¡±. This is to say, in the long run, these economic measures from China¡¯s side are unlikely to shake the foundations of Japan¡¯s macroeconomy. This is because, fundamentally, Japan is a high-end manufacturing powerhouse, not a country primarily reliant on agriculture or services. What will remain most critical to Japan¡¯s economy will still be its ability to sell cars to the United States, not the ability to sell seafood to China.

Politically, on November 24, the leaders of China and the United States also by phone again. Unlike their previous meeting in South Korea, this time the two sides explicitly discussed the Taiwan issue (according to China¡¯s side). Immediately afterwards, US President Donald Trump spoke with Takaichi. Although Takaichi did not mention whether the Taiwan issue was discussed in the press conference, she did not deny it either. Media outlets widely speculated that Trump exerted pressure on Japan at China¡¯s request.

This shows that regardless of how the outside world evaluates some of Trump¡¯s policies, he remains clear-headed, at least on historical and Taiwan issues. However, this has once again negatively impacted China¡¯s diplomatic strategy and international image. As the world¡¯s second-largest economy, which frequently clashes with the United States on various international stages, China still needs the US to mediate its conflicts with other countries at crucial moments, even if it¡¯s for China¡¯s own domestic problems. Rationally, this makes us wonder how China¡¯s ¡°brotherly¡± countries, like North Korea, Iran and even Russia, will view China after this recent Sino-Japanese conflict.

From a military perspective, Japan and Taiwan have completely different international statuses. Taiwan is a disputed territory, and if China were to launch a military attack on Taiwan, the United States would lack the legal basis to assist it, as the UN General Assembly resolution formally recognizes the ¡°¡± principle. Therefore, any conflict between mainland China and Taiwan would be considered as China¡¯s internal affair. Japan, on the other hand, is entirely different. Japan is a fully sovereign state and has a formal military alliance treaty with the United States.

If China and Japan were to go to war, the US military could fully intervene in it without any legal or realistic restrictions. As for Russia, the Russia-Ukraine crisis has already overwhelmed the ¡°polar bear¡± significantly; lots of experts doubt that Russia will truly have the capability and willingness to fully assist China when the war comes. As for China¡¯s other ¡°friendly¡± countries, such as North Korea, Iran and Myanmar, as well as others, they will likely only issue some diplomatic statements at most.

Ultimately, China still needs to face two military superpowers simultaneously ¡ª Japan and the United States ¡ª in which case, China would have virtually no chance of victory. Note that on Thursday, November 20, US State Department spokesman Tommy Pigott reaffirmed the US¡¯s commitment to Japan¡¯s national security on , without mentioning the ¡°One China¡± policy.?

The situation may continue to deteriorate

It is foreseeable that the situation will continue to deteriorate in the short term, and it will be hard to get back to the status quo ante. This is because the Chinese government has no way out of the issue of Sino-Japanese relations. The Taiwan issue not only concerns China¡¯s core interests ¡ª a red line within a red line ¡ª but also represents the most important foundation of public opinion for the CCP¡¯s rule in China.

However, this right-wing wave in Japan did not actually begin with Sanae Takaichi. Instead, it has already been sweeping across Japan for quite a long time. For instance, in , the Japanese Self-Defense Forces had already formulated plans to operate around the Taiwan Strait. In recent years, the Taiwanese, US and Japanese militaries have conducted numerous joint . What does this mean? It means that the US, Japan and Taiwan have already essentially begun preparing for military intervention in a potential Taiwan Strait crisis.

Does China know about these facts? Of course, it does. But for many years, the Chinese government has remained silent. Furthermore, Japanese warships the Taiwan Strait three times ¡ª in September 2024, February 2025 and June 2025 ¡ª neither the Chinese government nor the military has responded appropriately to such incidents, nor has it taken Japan¡¯s military actions seriously or analyzed them from a strategic perspective.?

Therefore, the rapid rise of right-wing forces in Japan in recent years has resulted from the goodwill shown to them by the former victorious powers in the surrounding region (China, South Korea, North Korea and Russia). Japan¡¯s passage through the Taiwan Strait under the guise of freedom of navigation is, in reality, an act of militarism that will inevitably be exposed.

Sanae Takaichi¡¯s firm decision to lift the lid on this matter may have been deliberate, intended to put a ¡°pressure test¡± on China. China¡¯s retaliation, to some extent, is also a ¡°pressure test¡± for Japan. China wants to test the economic reaction to decoupling from Japan. Of course, political factors are also at play. China has taken a series of actions, including conducting military exercises and so-called ¡°comprehensive military preparations,¡± all aimed at putting pressure on Japan.

Over the past decade, Sino-Japanese relations have experienced ups and downs, but have generally improved in the same direction towards a warming relationship. However, Takaichi¡¯s actions have completely undermined this long-held momentum and further fueled new animosity between the two countries. In other words, the achievements accumulated over many years in Sino-Japanese relations have been almost entirely destroyed this time.

For the moment, tensions thus far show no sign of abating. In the near future, we should not be surprised if small-scale conflicts even occur between China and Japan.

German philosopher Friedrich Nietzsche said, ¡°When you gaze into an abyss, the abyss also gazes into you.¡± And those words still resonate powerfully today. They serve as a constant reminder to every nation in the world, including China and Japan: most cycles of history begin with the forgetting of history!

[ edited this piece.]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

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It seems that the current technological revolution led by AI technology is far more eye-catching than the previous three. At present, AI is no longer just a buzzword limited to the field of science and technology. Rather, it is profoundly reshaping the development of the global economy with an unstoppable momentum and is becoming a key force in promoting the comprehensive transformation and upgrading of the human economic society.

Taking China as an example, the scale of China¡¯s core AI industry has grown at an average annual rate of more than 50% in the past five years. From smart manufacturing to smart cities, from smart healthcare to fintech, AI technology is deeply integrated into all aspects of China¡¯s economic system.

Besides, in the tide of the digital economy, big data has become the core element of AI to promote economic development. According to statistics from the Ministry of Industry and Information Technology of China, the total amount of various types of data in China has increased by an average annual rate of more than 30%. If sustained, it is expected that by the end of 2025, China¡¯s data scale will surpass that of the world¡¯s first-ranked country.

With the widespread application of big data and the rapid development of AI technology, South African businessman Elon Musk that most human labor will be replaced by robots sooner or later. Ren Zhengfei, the founder of Huawei, that the fourth industrial revolution, that is, the AI technology revolution, will be the last industrial revolution in the history of human social development.

Therefore, can big data and AI become the driving force of future human economic and social development? Furthermore, can AI replace humans in promoting social and economic development in the future? 

I believe that the answer is ¡°no¡± and that there are six aspects that make the replacement of humans by AI impossible.

The underlying logic of knowledge

The so-called market economy system is not a system that simply allocates scarce resources to given market participants, but a cognitive process: creating, discovering and transmitting knowledge that seems to be non-existent, difficult to find and difficult to transmit, that is, ¡°tacit knowledge¡±. The lack of human thinking and perception not only makes knowledge transmission impossible but also eliminates knowledge itself in the long run.

From a static perspective, the knowledge needed for human decision-making can be divided into two categories: scientific knowledge and practical knowledge. In Hungarian-British polymath Michael Polanyi¡¯s , scientific knowledge is explicit knowledge that can be expressed, and tacit knowledge is implicit knowledge that is difficult to express. Although both of them are important for human and creative decision-making, tacit knowledge is more important.

As far as scientific knowledge is concerned, a group of well-trained scientists may easily possess all the best knowledge available. However, tacit knowledge is bound to be scattered, local, subjective and inexpressible. It can only be mastered and utilized by individuals themselves, and it is difficult to obtain by others, nor can it be obtained by AI models.

Austrian-British economist and philosopher Friedrich Hayek :

It is in this respect that each person actually has a certain advantage over all others, because each person possesses unique information that may be extremely valuable, but it can only be used when decisions based on this information are made by each individual or through active cooperation with individuals.

This is to say, tacit knowledge cannot be transmitted to any computer in a statistical form because it is impossible to count. Apart from that, tacit knowledge changes at any time and place, and can only be effectively transmitted through a flexible price mechanism. It is like trying to catch the moon in the water for an AI model to collect such information. This is also the reason why AI can¡¯t replace humans. It has nothing to do with computing power.

Big data AI technology has indeed enabled us to have a larger database and more powerful computing power. However, no matter how extensive the database is, it is still statistical data, which is far from enough to include the implicit knowledge that cannot be expressed in words. Particularly, the implicit knowledge is the most critical factor in dealing with the contingency in economic development.

Take me as an example: I have been in the habit of recording detailed schedules for years, such as what information I received, who I met, what decisions I made and why I made such decisions every day. However, if I input the contents of my diary into the computer, can the computer predict my future decisions? Certainly, impossible. Most of my decisions are based on my inspiration and experience. The ¡°why¡± written in my diary cannot contain all the thoughts and ideas when I make a decision. By contrast, the implicit knowledge that is not written down is the most critical factor.

From a dynamic perspective, a large amount of knowledge is discovered and created by participants in the market economy in the process of economic activities and is the product of practice. Without autonomous economic activities, the information itself cannot exist. For example, suppose SpaceX had only waited for ChatGPT to issue instructions based on its prediction of future market profitability before starting research and development. In that case, most of SpaceX¡¯s rocket launch technology might not have been developed and realized until now.

Obviously, it is unlikely to collect information that has not yet been created, regardless of whether this knowledge is communicable or incommunicable. Therefore, big data and AI technology can only collect and analyze existing information. It is impossible to foresee information that is yet to be created and explored.

Hayek the dynamic nature of economic decision-making. He stated that changes, and only changes, cause economic problems. If things remain unchanged or continually develop as people expect, then there will be no new problems that require decisions. If someone thinks that change, at least daily adjustments, has become less important, then he is tantamount to arguing that economic problems have become unimportant.

Mises that the information constantly generated by the market comes from the exercise of entrepreneurial talent, which is related to a specific time and environment and can only be perceived by individuals acting in this environment. In a static state, economic calculation can be ignored because in this state, the same thing in economic development will happen repeatedly.

Back in the era of Mises and Hayek, there were no computers at the time, let alone big data and AI. However, the conclusions of Mises and Hayek have proven that even with computers, big data and AI, humans cannot be replaced because computers cannot easily collect the tacit knowledge that is crucial to economic development.

More broadly, participants in the process of social and economic activities can use computers, big data and AI models to help people continuously create an unimaginable amount of implicit knowledge, making it impossible for computers themselves to understand the implicit knowledge in people¡¯s minds fully.

Innovation of humans

According to Mises, Hayek and others, discovering, creating and transmitting information in a priced or nonpriced manner is a manifestation of the human innovative spirit.

In the mainstream economics framework, the goals and means of individual decision-making are given. The so-called decision-making process involves choosing the means that can optimize the goal among the given options. However, this is far from real innovative decision-making. 

On the contrary, in reality, innovative decision-making is not a decision made under the framework of given means and goals, but to find, identify and choose the goals and means themselves. The level of innovative spirit largely depends on the ability to perceive and identify goals, as well as obtain the necessary means. If the means and goals are given and are identical, all rational people will make the same choice under the same big data background. Nevertheless, what we observe in reality is that, even based on the same data and the same knowledge, different people will always make different choices.

This is because decision-making depends not only on data and knowledge, but also on imagination. The imagination, perception and judgment of each market participant on resource availability and market and technological prospects are the most critical.

Of course, big data and AI are useful to market participants because each market participant needs data support when making decisions. However, true decisions must go beyond data. Decisions based solely on big data are at best scientific decisions, but not innovative decisions. Innovative decisions must be able to imagine and see those facts that big data cannot directly reflect.

Just like after the Second Industrial Revolution, when electricity became available to all individuals and businesses, it was no longer the core competitiveness of any company. Therefore, truly innovative decisions must go beyond big data.

Let us take the film industry as an example. Imagine a film production company could access big data on all movies from the past few decades, including viewer numbers, audience age groups, geographic locations, viewing times, box office revenue, media reviews and even audience reactions (such as how often they laughed or how long they cried). Does that then mean that, even with such big data, AI can actually predict what the next blockbuster will be?

Every new film is essentially a new creation, and people simply cannot forecast which movies will resonate most with the public. As William Goldman, a veteran Hollywood screenwriter, : ¡°Why did Universal Pictures, the largest film studio, refuse to produce ¡¯Star Wars¡¯? Because no one now, and no one in the future, knows which movie will be a big hit and which will flop at the box office.¡±

The same is true for the book market. Amazon undoubtedly controls the core data of the book market. It can surely use AI algorithms to determine the types of books recommended to specific customer groups based on the customers¡¯ records of viewing and purchasing books. But even so, Amazon still cannot bet on which book will be a bestseller in the future, let alone tell each author what kind of book they should write in the future.

International (a shipping method where cargo is loaded into standardized containers for transportation by various modes) is one of the most important innovations of the second half of the 20th century. It has made great contributions to international trade, economic globalization and especially the global distribution of supply chains. Before the 1950s, goods were transported in bulk, whether by sea, rail or truck. The same goods had to be loaded and unloaded repeatedly from the manufacturer to the retailer, which was time-consuming, labor-intensive, costly and prone to theft, making it very unreliable. At the dock, the goods are usually piled up like mountains, making people miserable.

As early as 1937, , a truck driver in North Carolina, had the idea of using containers for transportation. In 1955, he sold his shares in the family transportation business, took out a loan to buy seven old tankers and converted them into platform ships that could stack containers. Next, he reinforced the truck cargo box to convert it into a trailer capable of loading containers. He installed a steel frame above the deck of the tanker and then installed a plug that could quickly place containers.?

On April 26, 1956, a converted World War II tanker set off from the Port of Newark, New Jersey, to Boston, with 58 containers on board. McLean then made the same transformation to several other old ships and opened a container shipping route from New York to Texas.

Via his success, other shipping companies followed quickly. By the late 1960s, the era of container transportation had finally arrived. By the late 1990s, 60% of the total value of international trade goods was transported by containers. Compared with bulk transportation, the transportation time from producer shipment to buyer receipt is reduced by 65%, and the unit transportation cost is reduced by 58%. It can be said that without the revolution of container transportation, there would be no global division of labor in the industrial chain that emerged after the 1970s.

However, why was it McLean who invented container transportation, rather than the original shipping companies or anyone else? This obviously cannot be explained by data. As far as data is concerned, McLean was originally just a truck driver, and the data he had was not at the same level as that of traditional shipping companies.

The fundamental reason was inspiration. McLean had this inspiration one step ahead of others. He later recalled in an interview that one day in 1937, while anxiously waiting for the cargo to be loaded and unloaded, an idea suddenly struck him: Why not lift the cargo box without touching anything inside and put it directly on the ship?

In short, no database, no matter how large, can replace human thinking and judgment. Amazon¡¯s big data cannot replace Jeff Bezos, and the world¡¯s big data also cannot replace global entrepreneurs.

Risk and uncertainty

In essence, risk and uncertainty are two completely different concepts. Human decision-making cannot be based solely on data because business operations and innovations are mainly faced with uncertainty, rather than risk. Although ¡°uncertainty is the most certain thing¡± has become a slogan that everyone knows in the business and financial fields, most economists and business managers refer to risk when they talk about uncertainty. American economist made a clear distinction between the two as early as 1921, but unfortunately, his theory has not changed the situation in which economics equates uncertainty with risk.

According to Knight, risk is quantifiable, but uncertainty is not. Risk has a probability distribution based on the law of large numbers, so it can be reduced or increased. However, uncertainty has neither a priori probability nor statistical probability, so it cannot be reduced or increased in advance. In other words, risk is exogenous (external), while uncertainty is endogenous (internal).

The uniqueness of uncertainty means that past data cannot provide information about the future. , the , , and , among other statistical concepts, can only be applied to risk management but offer little assistance in addressing uncertainty.

Innovation is a unique ability of human beings. The most fundamental characteristic of innovation is that its process is full of a series of uncertainties, rather than risks in the usual sense. No one can predict in advance whether an innovation will succeed, nor can they calculate the probability of success.

In an uncertain world, the most valuable predictions cannot be based on past data alone. This is why the human thought process is vital: to cope with uncertainty.

Because our future is uncertain, people¡¯s predictions cannot be based on statistical models or calculations, but only on their ¡°mind model¡±, imagination, self-confidence, judgment and even courage. Any prediction that can be made through a statistical model cannot be called innovative work.

As it should be, big data can undoubtedly provide more information than sample data, and AI technology can also help to more accurately calculate the probability distribution of risk events, thereby helping data users reduce, disperse or transfer risks. However, there is still no big database or AI algorithm that can predict the probability of success of an innovation in the future.

AI will never be able to predict why plasma TVs and rear-projection TVs failed to compete with LCD TVs, nor can it tell us why DeepSeek suddenly emerged, the traditional taxi industry lost to Uber and Uber lost to Didi (a Chinese online ride-hailing company) in the Chinese market.

If our world only had risks (such as natural disasters caused by weather and earthquakes) and no uncertainties, predictions based on big data and AI technology might be possible. But in the real world, in addition to risks, there are countless uncertainties. Dealing with uncertainty requires human autonomy and unique thinking ability. If we mistakenly believe that our world is full of risks and try to deal with uncertainty by dealing with risks, the result will definitely be the stifling of human creativity.

The concepts govern people¡¯s behavior

For a long time, the basic view of mainstream economics is that interests completely dominate human behavior, and rationality can almost explain everything. But as Scottish economist pointed out more than 200 years ago, human behavior is not only dominated by interests, but also by the concepts they hold.?

Moreover, people¡¯s understanding of interests is often perceived through concepts as well. In other words, what one thinks is in their interests is related to the concepts they hold. Therefore, even if people only act according to their own interests, their behavior is still affected by concepts.

Because concepts influence people¡¯s behavior, it is often difficult to make a clear distinction between cause and effect. The same phenomenon can have completely different consequences, depending on how people understand it.

?For example, the Great Depression of the 1930s led to the Social Democratic Party taking power in Sweden, while in Germany, the Nazis came to power. The East Asian financial crisis in led to the decentralization of government power in some countries, while the financial crisis in 2008 made the governments of some countries more centralized. In the face of financial crises, the government’s response policies depend on whether those in power believe in or Hayek¡¯s business cycle .

Since concepts govern human behavior, it is impossible to accurately predict the future from past data. No matter how powerful an AI model is, no one could have predicted the sudden collapse of the Soviet Union in 1991, because it is impossible to predict that human concepts will change so quickly. ChatGPT did not predict that Trump would retake office in 2024, and DeepSeek also did not predict that the Trump 2.0 administration would immediately issue such a shocking tariff policy.

Therefore, understanding the future is always a matter for humans. No AI model can accurately predict the future of humans simply by using big data. If AI wants to succeed in this regard, it must control the human mind, which is an impossible mission. However, humans can indeed be brainwashed sometimes.

From the perspective of evolution

The stability of species comes from heredity, while evolution comes from variation. Variation refers to the mistakes made by genes during replication. Once this mistake is positive and has higher adaptability, nature or humans will favor it, and new genes will replace old genes. With such variation, species evolve. If genes do not mutate, species will not evolve.

However, heredity may be predictable, but mutation is unpredictable. This is true for the evolution of species and the progress of human society. Likewise, innovation is the mutation of social genes. Without innovation, human society will not progress. Among others, thinkers and entrepreneurs are just the power of mutation in our society. Big data and AI may reveal what the future holds if we follow the rules. However, they have no way to predict what kind of innovation will appear in the future.

Innovation is the emergence of unique ideas and concepts and their implementation. If this new concept gains recognition from society, it will gradually dominate societal development. If it is not recognized and is killed at the outset, our concepts will not change, and society will not progress.

Tobacco originated in America and was introduced to China in the late 16th century. Yunnan Province, located in southern China, has a tobacco planting history of over 100 years. However, the reason why Yunnan Province nowadays has become China¡¯s ¡°Tobacco Kingdom¡± is not only due to climatic conditions, but also related to the evolution of tobacco varieties. 

At the beginning, Nanyang Brothers Tobacco Company introduced a high-quality American tobacco variety called ¡°¡± in Yunnan. In 1962, a tobacco farmer in Yunnan Province discovered a unique and different ¡°Golden Yuan¡± with large and gorgeous flowers. Then, the farmer sent the plant to the Yunnan Academy of Agricultural Sciences for research. Experts found that it was a mutant ¡°Golden Yuan¡±. As a result, ¡°Big Golden Yuan¡± was cultivated and spread soon, leading to changes in the tobacco varieties in Yunnan Province.

The emergence of the ¡°Big Gold Yuan¡± is obviously not something that can be deduced by the AI model. On the contrary, if humans strictly follow the conclusions given by the AI model, the ¡°Big Gold Yuan¡± may not even survive.

Similarly, innovation cannot be calculated by AI. Valuable innovation must be discovered and screened by humans in the process of practice. Moreover, the process of discovery often happens by accident, not by conscious search. Complete reliance on big data and AI may ultimately stifle innovation and the source of human progress.

Extension of the ¡°Lucas Critique¡±

There is a famous theory in macroeconomics ¡ª the ¡°¡±, which means that any economic model based on empirical data cannot be used for policy-making, because the implementation of the policy will change the model itself that derives the policy.

I would like to extend the Lucas Critique as follows: any market economy-based empirical laws cannot be used for policy making, because the implementation of such policies will change the basis of the behavior of the empirical subject. 

For instance, suppose that through the calculation of big data, the AI model tells us that the enterprises with an annual output of 10 million tons in the steel industry are the most efficient. Suppose the government stipulates that enterprises with a yearly production capacity of less than 10 million tons are not allowed to invest. In that case, enterprises with an annual production capacity of 10 million tons cannot be the most efficient, as this is no longer a result of competition. 

Similarly, most of the large number of entrepreneurs who emerged in China when the reform and opening up just started in the 1980s had never attended college. If a policy is formulated based on this big data to allow only those who have not attended college to start businesses, then many potential entrepreneurs will lose the opportunity to enter the market.

Big data and AI may indeed replace a large number of non-creative jobs, but they can never replace people¡¯s innovative spirit, as long as human society does not enter a static state, namely, without change, innovation or progress. If ever humans still need an innovative spirit, we cannot simply rely on big data and AI.

Finally, two points needed to be pointed out:

First, this article does not completely oppose big data and artificial intelligence, but the idea of ??relying entirely on them and firmly believing that they will replace humans in the future.

Second, this article does not mention the unique incentive mechanism problem in the human economic system. The above statement only proves that even without considering incentive, it is impossible for big data and AI to completely replace human labor and thought. If the incentive factor is taken into account, it is even more unrealistic for big data and AI to replace humans.

[ edited this piece.]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

The post Can AI Take Control of Human Economic Development and Replace Humans? appeared first on 51³Ô¹Ï.

The most direct trigger for this decline was the latest released by the US Bureau of Labor Statistics on September 5. According to the report, non-farm payrolls increased by only 22,000 in August, far below market expectations of 75,000, indicating a significant slowdown in job growth, possibly even stagnation.

Furthermore, the employment figures for June and July were revised downward by a combined 21,000, further confirming the deteriorating labor market trend. As a result, market expectations of a rate cut by the Federal Reserve at its meeting on September 17 rose sharply, to a decline in the US dollar index and a surge in spot gold prices.

The recent slowdown in US job growth can be primarily attributed to two factors: first, the Trump administration¡¯s comprehensive imposition of import tariffs, which has led to a sharp increase in business costs and discouraged hiring; and second, tightened immigration enforcement, which has directly reduced the labor supply.

Despite a 0.3% month-over-month increase in average hourly earnings, signs of a cooling overall job market are clear. Beyond the non-agricultural data, other labor market indicators are also flashing , including a slowdown in private sector hiring, rising initial unemployment claims, increased layoff announcements and, for the first time in four years, a situation in which job seekers outnumbered job openings. This suggests a labor market stalemate characterized by ¡°low hiring and low layoffs¡±, with liquidity nearing a standstill.

Concerns over job growth in specific sectors showed significant divergence. Healthcare and social assistance continued to be the primary drivers of job growth, adding 31,000 and 16,000 jobs, respectively. However, federal government employment was sure to be the primary drag, declining by 15,000 in August and totaling 97,000 since its peak in January.

Furthermore, wholesale trade employment continued to decline, falling by 12,000. This stagnant state of low liquidity is highly unstable; in the event of an external shock, unemployment is likely to soar rapidly, thus creating greater macroeconomic uncertainty.

Short-term risks and long-term investment outlook

However, despite market volatility and the possibility of short-term pullbacks, investors may still consider prudently increasing their holdings and taking advantage of future market pullbacks to appropriately increase their equity exposure due to:

¡ª Earnings growth momentum remains stable. of S&P 500 companies have reported second-quarter results, with more than half exceeding earnings expectations.

¡ª The interest rate cuts are expected to support the stock market. The latest inflation data shows that while price pressures remain in some sectors (particularly the services sector), declining energy prices and stabilizing commodity inflation are helping to ease overall price pressures. Slowing labor market demand could also lead Federal Reserve officials to adopt a more dovish stance. History has repeatedly shown that Fed rate cuts are consistently associated with stock market returns when the economy continues to grow.

¡ª Long-term AI trends remain intact. Large technology companies delivered strong second-quarter earnings, with most exceeding revenue and earnings-per-share expectations.

¡ª The stock market is expected to continue to experience positive returns after September. After a weak September, the S&P 500 has averaged positive returns in October and November over the past 10 years.

Mounting US debt pressures

By contrast, the short-term risk faced by the US debt may appear to be an ¡°upside surprise¡±. For example, Ray Dalio, founder of Bridgewater Associates, some sharp and critical views on the US economic situation and President Donald Trump¡¯s policies. He believes that the US has at most three years to resolve its debt problem. His reasons are twofold:

First, the debt-service cost ratio. He compares the credit system to blood circulation, and as a measure of ¡°blood vessel blockage¡±, Dalio focuses on the ratio of national revenue to debt-service costs. The United States currently has nearly in fiscal revenue, while the weighted average interest rate on US Treasury bonds is a whopping . The Congressional Budget Office (CBO) projects net interest payments to total over the next decade, rising from an annual cost of $1.0 trillion in 2026 to $1.8 trillion in 2035. In recent years, both parties have been increasing the debt ceiling, and the One Big Beautiful Bill Act () passed in early July added another $5 trillion, which will only exacerbate the debt problem.

The second is the impact of populism. Dalio believes the rise of populism will further weaken democracy, exacerbate debt accumulation and accelerate the onset of a crisis. Trump¡¯s current promotion of state capitalism is a prime example of this type of populism: he seized a stake from Intel and siphoned of all of Nvidia¡¯s export revenue to China. Populism poses the risk of a ¡°heart attack,¡± according to Dalio, which is why he believes the US debt crisis has only three years left.

The global impact of US interest rate cycles

Meanwhile, I personally think that Dalio¡¯s prediction is too conservative. In reality, the US debt crisis is likely to occur earlier than expected for two reasons: firstly, the US dollar interest rate cut cycle is expected to accelerate the debt crisis, and secondly, populism may trigger a crisis prematurely.

Historically, US dollar interest rate cuts have triggered several major financial crises worldwide. For instance, the 1982 rate cut led to the Latin American , a result of the so-called ¡°dollar tidal effect,¡± in which the Federal Reserve¡¯s alternating cycles of rate hikes and cuts drive global capital flows.

Taking the Latin American debt crisis as an example, the ¡°dollar tidal effect¡± and ¡°monetary policy dilemma¡± are vividly demonstrated. During the low-interest-rate period of the 1970s, Latin American countries borrowed heavily in US dollar-denominated foreign debt to develop their economies. In the , the Fed raised interest rates to 22% to curb inflation, causing a sharp increase in Latin American debt repayment costs and triggering a wave of debt defaults. In , the Fed cut interest rates again by 25 basis points to 4.00%-4.25%. Still, US Treasury yields remain high (around 4.1% for 10-year bonds), with interest payments accounting for 18.4% of federal revenue, exacerbating debt pressures in the Global South.

As a result, the so-called ¡°debt trap¡± is gradually forming. Latin American debt-to-GDP ratios exceeded during the 1982 crisis. As of October 2025, the US federal debt-to-GDP ratio has reached , with interest payments projected at $952 billion. History shows that while US interest rate cuts may initially ease short-term debt repayment pressures, if accompanied by rising commodity prices (such as oil), they can actually drive up imported inflation and squeeze policy space.

Surely, Latin American countries cut interest rates early in 2023 to counter the Fed¡¯s policy shift, but a rebound in inflation in 2024 made regulation more difficult. For instance, the Brazilian real depreciated by in the first half of 2024. Although the US dollar rebounded by in the short term after the Fed¡¯s September rate cut, its depreciation could trigger a new round of imported inflation in the medium to long term.

Therefore, while US interest rate cuts can ease liquidity pressures in the short term, they may also exacerbate debt vulnerabilities in the Global South in the long term through inflation expectations, capital market fluctuations and geopolitical competition.

This pattern remains relevant today: although the Fed¡¯s 2025 rate cut to 4.00%¨C4.25% temporarily eased global liquidity, persistently high US Treasury yields and mounting federal debt have heightened financial pressures across the Global South, particularly through imported inflation, capital outflows and shrinking policy space.

Another example is the 2007 interest rate cut, which directly led to the outbreak of the 2008 global financial crisis. Many scholars, including myself, argue that the Federal Reserve¡¯s rapid monetary easing played a decisive role. As the subprime mortgage crisis unfolded, the Fed its benchmark rate from 5.25% to 2% through seven consecutive reductions, yet this failed to prevent the collapse of major financial institutions such as Lehman Brothers.

By December 2008, the Fed had slashed rates to a near-zero range of 0%¨C0.25% and launched large-scale quantitative easing (QE). This ¡°zero interest rate + QE¡± combination temporarily stabilized markets but also amplified debt leverage and speculative bubbles, sowing the seeds of further instability. The low-interest-rate environment fueled the real estate bubble, and when it burst, mortgage-backed securities (MBS) collapsed in value, triggering a global chain reaction. 

Moreover, as the US dollar serves as the world¡¯s primary reserve currency, aggressive rate cuts spurred massive cross-border capital flows that deepened financial fragility in emerging markets. Finally, markets interpreted the Fed¡¯s rate cuts as a signal of impending recession, prompting panic and a rapid flight from risky assets.

Why rate cuts can trigger crises

Why do interest rate cuts so easily trigger an economic crisis? In the financial market, raising interest rates is akin to storing water. Capital is inherently profit-seeking; it always flows to wherever there is money to be made. When interest rates rise, capital would rapidly flow into the US due to the increased returns.

Historically, US total savings have taken, on average, about eight years to increase by $1 trillion. However, it took only three years for the US gross domestic savings to from $4.19 trillion in 2021 to $5.29 trillion in 2024, a clear result of the interest rate hike.

In addition, the rapid growth of the US stock market cap, for instance, the , from $30.12 trillion in September 2022 (before the rate hike) to $57.05 trillion in September 2025 (an increase of $26.93 trillion), is also stemming from the influx of international capital into the US caused by the interest rate hike. On the contrary, lowering interest rates is like releasing water from a reservoir. With lower interest rates, capital will flow out of the US and into countries with higher interest rates.

At this point, the US dollar appears poised for another cycle of rate cuts. However, the US macroeconomic fundamentals have shifted significantly over the past decade. In 2008, the federal government¡¯s debt-to-GDP ratio was a healthy . Today, as we know, that ratio has exceeded 120%, and the Fed has already maintained interest rates in the 4.25%¨C4.50% range for nearly a year.

Chair of the Federal Reserve Jerome Powell¡¯s approach is clearly signaling a strong conservative stance; he understands that the US economy cannot withstand significant volatility and that only gradual interest rate reductions can help the US economy achieve a soft landing. According to Powell¡¯s logic, the rate cuts should be slow and gentle and might continue until 2027. However, in reality, this approach is unlikely to be implemented to a larger extent, as some in the White House are staunch opponents of this idea.

Political pressures and the Fed¡¯s independence

The US political and economic system has long been framed as a straightforward system: the Fed is responsible for the dollar, and the US president is responsible to the voters.

Clearly, as a president with distinctly populist ideologies, Trump places great importance on fulfilling his campaign promises. Especially with the crucial 2026 mid-term elections approaching, Trump is undoubtedly eager for the Fed to quickly cut interest rates so that he can leverage his dominant position in Congress to distribute money to his supporters to win votes.

Over the past six months, Trump has consistently the Fed to swiftly cut interest rates. However, the Fed¡¯s reluctance to comply has led to repeated attacks on Powell, even threatening to fire him. Besides, Trump an emergency order from the Supreme Court demanding the resignation of Fed Governor Lisa Cook, acting as a warning to Powell. Therefore, whether Powell can withstand the pressure and continue his steady approach to rate cuts remains uncertain in the short term.?

However, even if Powell manages to withstand the pressure, it might be of little use, as his term as chairman is set to end in May 2026, and Trump has made it that he has no intention of nominating Powell to continue as Fed Chair.

Trump previously that the list of candidates for Federal Reserve Chair has been narrowed down to three: Kevin Hassett, former director of the White House National Economic Council; Kevin Warsh, a former Federal Reserve Governor; and Christopher Waller, a Federal Reserve Governor. Clearly, these candidates are all in Trump¡¯s camp. If sustained, as one of them is ultimately appointed, not only will the Fed¡¯s independence be compromised, but rapid interest rate cuts could also lead to an accelerated economic crisis.

A looming debt crisis

Once an economic crisis breaks out, it will most likely trigger a US debt crisis. This is because, given the current US fiscal situation, the US government can no longer independently resolve the debt crisis.

Certainly, the US successfully weathered the 2008 financial crisis thanks in part to the Fed¡¯s direct intervention to rescue the market. At the time, total US debt stood at $9 trillion, and the Fed its balance sheet from $900 billion to $4.5 trillion to support the economy. This time, however, with the current US debt pile approaching , how much liquidity would the Fed need to release to avert a debt crisis?

More broadly, the US¡¯s release of liquidity must require someone to take over. From this perspective, the US¡¯s ability to recover from the 2008 crisis was also largely due to China¡¯s assistance. 

During the 2008 global financial crisis, the Chinese government massively increased its holdings of US Treasuries, skyrocketing from at the end of 2007 to at the end of 2008, a nearly $250 billion increase in just one year. By the end of 2009, China had continued to rise to , another $170 billion incredible increase in just one year. By 2014, when the US finally emerged from the crisis, China¡¯s outstanding holdings of US Treasuries had reached , 2.6 times the 2007 level.

This time, however, if another crisis hits the United States, will China still come to its ¡°aid¡±? Most likely not. Due to the tensions caused by the bilateral trade and tariff war, it would have been a good thing if China had not taken the opportunity to retaliate against the US at that time. However, except for China, very few countries around the world can currently take on such a large amount of US debt in such a short period of time.

In summary, if Trump makes a radical decision to cut interest rates in the third and fourth quarters, the likelihood of an economic crisis will increase dramatically, ultimately resulting in a collapse of US debt. Perhaps one will not have to wait three years. Instead, we could see a clearer outcome before 2027.

[ edited this piece.]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

The post Trump¡¯s Pressure on the Federal Reserve Risks a US Debt Crisis appeared first on 51³Ô¹Ï.

The majestic troops, sophisticated equipment and meticulous marching demonstrated the tremendous progress China¡¯s military has made in recent years. From the founding of the People¡¯s Republic of China (PRC) in 1949 to 2025, China has held 20 large-scale military parades, the most numerous of which were themed around .

China¡¯s strategic missile showcase

The global focus of this military parade was primarily on the various weaponry on display. For example, the intercontinental ballistic missile ¡ª a solid-fuel missile ¡ª boasts a 1.6-ton warhead. There¡¯s also the rumored ballistic missile, which uses liquid fuel and is therefore with a higher level of stability.?

Liquid fuel¡¯s high momentum allows it to carry a much heavier warhead than solid-fuel missiles. As a result, the DF-5C¡¯s warhead can weigh up to 7 tons and can carry 10 independently targetable nuclear bombs, posing a significant threat to defense systems worldwide.

Furthermore, its range has been significantly increased. Some Chinese military bloggers estimate the DF-5C¡¯s range to reach 25,000 kilometers, meaning it could strike any target worldwide from China. Additionally, its accuracy has been significantly improved compared to its predecessor, the , with an estimated deviation of less than 500 meters. Therefore, in the event of a future nuclear war, the DF-5C would almost certainly become a powerful weapon for China¡¯s second-stage nuclear retaliation.

The surprise debut of the DF-61

Meanwhile, what drew even more attention was the ¡°upside surprise¡± ¡ª the . Its detailed technical specifications remain unknown to the world. However, its unannounced appearance foreshadowed several key points. First, before the parade, global media and military enthusiasts mainly focused their discussions on the potential appearance of a modified version of the DF-41 and the DF-51.

However, the DF-61 suddenly made its debut, skipping over the DF-41 and DF-51. As a previously unforeseen new model, this undoubtedly signals a significant shift in the naming and sequence evolution rules for China¡¯s strategic missiles. Second, based on these changes, it can be inferred that the range and targets of China¡¯s strategic missiles have also undergone significant adjustments.

Hypersonic weapons and the four-in-one system

Moreover, the parade also demonstrated that China has already established a comprehensive hypersonic missile system. Various hypersonic missiles, the YJ-15, YJ-17, YJ-19 and YJ-21, were unveiled, ranging from 400 to 2,000 kilometers.

The YJ-21 hypersonic anti-ship missile, in particular, has even been dubbed as ¡°US-exclusive¡± by Chinese military enthusiasts. It is 7.5 meters long, 70 centimeters in diameter, and has an 800-kilogram warhead. It boasts a range of 2,000 kilometers and a glide speed of Mach 6 to 7 in the intermediate phase. It is capable of maneuvering, changing trajectory and performing complex maneuvers such as the ¡°Qian Xuesen ¡± and the ¡°sea skimming ¡±. Combined with satellite and radar/infrared guidance technology, its terminal attack speed can exceed Mach 10, though the exact speed is currently unknown.

A single YJ-21 missile costs roughly $20 million, yet it can destroy an aircraft carrier valued at $13 billion. Even at a terminal speed of only Mach 10, it can penetrate steel plates up to three meters thick. In a simulated by the Chinese military, a YJ-21 sank a decommissioned cargo ship.

The is another new submarine-launched missile that has been highly classified but has attracted great attention from governments and military enthusiasts around the world. It is said to have a launch range of up to 12,000 kilometers.

Implications for Taiwan and the US

Judging from the missiles displayed by China, it appears that China has already established a comprehensive missile system, including road-launched (DF series), air-launched (PL series), ship-launched (YJ series) and submarine-launched (JL series) systems, with most of them capable of being loaded with nuclear warheads. The consequence of this four-in-one strategic nuclear strike capability is that it will make it more difficult for other countries to detect the source of the missile in the future.

Judging from the performance of these weapons, approximately 75% of them should be aimed at the United States, while the remaining 25% should be targeted at the . Therefore, for Taiwan, situated at the most crucial point of the First Island Chain, this parade clearly does not bring good news.?

Not only is it located in a strategically important location that China is determined to capture, but many of the weapons in the parade appear to have been designed explicitly for Taiwan as well. These include weapons such as the rocket launcher, which has a range of 400 kilometers, capable of covering nearly the entire island of Taiwan, as well as various latest amphibious landing combat equipment.

Overall, China¡¯s September 3rd military parade will have a significant, even fundamental impact on the future balance of power and geopolitical relations in the Indo-Pacific region. In particular, the parade showcased the most devastating trends in weapons development that could impact the future global strategic balance: automation and AI technology. 

China mainly three separate formations of unmanned weapons and equipment, including many unprecedented devices such as robotic dogs, unmanned vessels, various types of drones, and laser and microwave counterdrone systems. Perhaps the most notable of these were the two 20-meter-long unmanned underwater vehicles () ¡ª the HSU-100 and AJX-002. These are two other pieces of advanced equipment that have never been disclosed and are generally believed to be specifically aimed at the United States, particularly for their strategic nuclear submarines and aircraft carriers.

Given China¡¯s consistent low-cost manufacturing , in the future, US strategic nuclear submarines and aircraft carriers could face pursuit, interception and suicide attacks in the vast Pacific waters from dozens or even hundreds of Chinese UUVs ¡ª the so-called ¡°¡± tactic. If this truly happens, it would undoubtedly force the US to make significant adjustments to its future combat tactics and even strategy.

Specifically, this parade framed the situation that will likely force the US to make vital strategic adjustments and structural rebalancing in the Pacific region, including its approach to Taiwan. Simply put, the First Island Chain will no longer be a place where the US can freely enter and exit. Forced to do so, the US may choose to adopt a strategic distance, given the threat posed by China¡¯s various hypersonic missiles to its aircraft carriers, since the potential costs are simply too high to bear. 

US submarines attempting to enter the First Island Chain will also be subject to saturation attacks from China¡¯s low-cost but numerous UUVs. Thus, if the US cannot devise a countermeasure, it will have no choice but to withdraw. In reality, the US military bases in Okinawa, Japan ¡ª which are very close to China ¡ª are already their presence, a clear example of this. Gradually, the US concept of ¡°assisting Taiwan¡± will become a strategy that must be abandoned.

In this context, for Taiwan, the sense of urgency is even greater than for the US. As mentioned above, Taiwan is directly on the front lines facing mainland China, with a distance of only 130 kilometers. Therefore, this parade also serves as a wake-up call and a paramount concern for the Taiwanese authorities: Taiwan urgently needs to change its approach to combating mainland China. 

Taiwanese soldiers will no longer face hand-to-hand combat and urban warfare, but rather the People¡¯s Liberation Army¡¯s (PLA) various unmanned landing military equipment, such as robot dogs, drones and unmanned tanks. Perhaps in the future, before mainland China completely conquers Taiwan, many Taiwanese soldiers might never have even seen a single PLA soldier on the battlefield.

Yet in a shifting geopolitical landscape marked by China¡¯s parade, the first joint appearance of the leaders of China, Russia and North Korea is undoubtedly even more epoch-making than those weapons. It is definitely signaling the emergence of a group challenging the existing international order.

Interestingly, this is also thanks to US President Donald Trump. His policies, including the weaponization of trade and tariffs, have pushed China, Russia, India, North Korea, Iran and so many others into a common camp, but have also triggered a wide swath of allies to from the US.

After the parade, China, Russia and North Korea are very likely to use this opportunity to establish a regional security coordination mechanism, further consolidating their respective regional influence. On the contrary, Japan and South Korea will ultimately bear the brunt of this impact.

Xi Jinping¡¯s political calculations and limits of force

From China¡¯s political system perspective, President Xi Jinping¡¯s current term will end at the 21st National Congress of the Chinese Communist Party (CCP) in . Traditionally, the Fourth Plenary Session of the 20th National Congress of the CCP, to be held in October of this year, will discuss the issues of leadership succession. At this somewhat delicate juncture, ³Ý¾±¡¯²õ invitation to over 20 heads of state from around the world to put all their efforts into hosting such a grand military parade, in some ways, demonstrates his determination to remain in office after 2027.

Nevertheless, an assessment of China¡¯s military exercises cannot be based on social media outlets. Many Western netizens online criticize China¡¯s weapons as being made of ¡°plastic¡± and lacking combat experience. These netizens¡¯ primary goal is to attract attention, generate net traffic and ultimately generate revenue for themselves. 

A true assessment of China¡¯s military strength should be based on information and reports released by the Pentagon. People should believe that the US military understands whether to worry about these weapons, which may be made of ¡°plastic¡±.

In addition, the inner stability of China¡¯s political system is also a key factor limiting the ultimate effectiveness of these seemingly lethal weapons. Although ³Ý¾±¡¯²õ power within the Communist Party¡¯s centralized system remains unshakeable for now, it¡¯s not as secure as a rock. Over the past two years, many of ³Ý¾±¡¯²õ closest associates in the military have been by the Communist Party¡¯s Central Commission for Discipline Inspection, reflecting a highly unusual political trend.?

Generally speaking, in China¡¯s political system, so-called ¡°disciplinary investigations¡± are merely a cover-up. In reality, they are just a political tactic to eliminate dissidents. If corruption and bribery were truly the standard, then at least half of the 100 million Communist Party members would be imprisoned. Therefore, it remains to be seen whether Xi still maintains unquestionable control over the military. Without absolute control over the military, dictators are generally reluctant to wage a war. Failure could mean the rapid collapse of the regime, a risk neither Xi nor the CCP dares to take.

The same is true of the Taiwan issue. From a purely military perspective, it would be easy for mainland China to defeat Taiwan¡¯s military. However, the question is, after conquering Taiwan, how would the CCP govern a place of 30 million people? If, as happened in before, there were a series of mass protests against authoritarianism and for democracy in Taiwan, the CCP would once again become an international laughing stock. This, more than military strength itself, is what the CCP fears most.

Military strength, certainly, is important and necessary. However, from the perspective of human history, the succession of dynasties isn¡¯t solely determined by force. What is more crucial is the will of the people. Looking around the world, from ancient times to the present, in the vast majority of dynasties, has the ruling class not possessed the most advanced weapons of the time? Yet, in the end, weren¡¯t their regimes overthrown by the people?

Force cannot solve all problems. Otherwise, the Soviet Union of yesterday would not have collapsed, and the US would also be invincible today. But how could it be so embarrassed because of a tariff war?

Albert Einstein once , ¡°Peace cannot be kept by force. It can only be achieved by understanding.¡± This statement reflects his profound pondering on World War I. That is to say, any country that insists solely on unilateral militarism will inevitably descend into war and violence, and its military power will lie more in parade than in execution. Only through mutual understanding and cooperation can we achieve peace and progress.

[ edited this piece.]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

The post What China¡¯s Lavish Military Parade Revealed to the World appeared first on 51³Ô¹Ï.

Beijing¡¯s propaganda-first diplomacy

China¡¯s foreign diplomacy often prioritizes optics over substance. Chinese leaders frequently structure official visits to yield material for domestic propaganda rather than actual policy breakthroughs. When President Xi Jinping visited France last year and to secure an electric vehicle (EV) export deal with the European Union, he padded the itinerary with visits to Hungary and Serbia ¡ª two ¡°brother¡± countries friendly to Beijing. The Chinese propaganda machine subsequently portrayed the trip as a success.

³Ý¾±¡¯²õ to Southeast Asia in April followed the same formula. Vietnam, a of China and a vocal critic within ASEAN, offered little progress on major economic agreements. To offset this, Xi added a stop in Cambodia, a close Chinese ally. Cambodian Prime Minister Hun Manet, son of former Prime Minister Hun Sen, publicly that ASEAN would not permit anti-China narratives at the institutional level. Manet¡¯s statement prompted the Chinese domestic media to once again praise the significant achievements of this visit in a dramatic fashion, while completely overlooking the cold reception they encountered in Vietnam.

Despite these efforts, China¡¯s real focus remains on the region¡¯s centrist governments, particularly Malaysia. At the summit, Malaysian Prime Minister Anwar Ibrahim outlined a position that captured the ASEAN consensus, which I roughly summarized as: buy Chinese goods, befriend the Americans and maintain neutrality. While many in China may reject this approach, ASEAN countries are increasingly seeing it as pragmatic ¡ª especially amid China¡¯s economic slowdown.

Malaysia illustrates this shift. Though China remains its largest trading partner and has a sizable diaspora there, Malaysia¡¯s export-oriented economy sends nearly of its goods to the United States. Its leadership has made clear that it will not jeopardize ties with Washington to appease Beijing. As Malaysia continues to modernize its industrial base, its ability to absorb China¡¯s excess capacity ¡ª ranging from socks to EVs ¡ª is limited.

China¡¯s outdated strategic playbook

Today¡¯s world is shaped not by rigid geopolitical alliances but by deep flows of transnational capital. States now act as tools for global capital to manage and extract resources across borders. This economic reality has overtaken the Cold War-era view that emphasized ideological blocs and zero-sum diplomacy. Countries now seek growth and profitability, not confrontation.

Despite this shift, Beijing clings to an outdated model. Chinese Premier arrived at the summit seeking to export China¡¯s overcapacity, but failed to account for Malaysia¡¯s own manufacturing ambitions. Rather than forging partnerships, China is increasingly competing with the economies of the Global South. Meanwhile, these southern nations have built more effective relationships with developed countries ¡ª combining raw materials with Western capital.

At high-level summits like this one, real diplomacy often happens outside formal sessions ¡ª over tea breaks, informal chats or corridor encounters. These moments allow seasoned politicians to resolve sensitive issues quickly. 

Former Premier Li Keqiang, who of a heart attack in 2023, effectively utilized the ¡°free time¡± outside of formal talks, reflecting his wisdom as a politician. In contrast, neither Xi Jinping nor Li Qiang has demonstrated this political agility. Their stiff, scripted approach leaves little room for improvisation or personal connection ¡ª an increasingly critical shortcoming in global politics.

Image-driven diplomacy and its consequences

Chinese diplomats place disproportionate importance on the opening stages of international summits. When cameras roll and reporters take notes, they project an image of strength and defiance. Once the doors close for real negotiations, they fall silent. At the China¨CUS High-Level Dialogue in Alaska, 1.4 billion Chinese civilians living in an internet blockade saw the proud picture of former State Councilor angrily scolding former US Secretary of State Antony Blinken: ¡°The United States has no right to talk to China from a high position, and the Chinese people will not buy it.¡±?

This carefully choreographed confrontation became a symbol of China¡¯s ¡°diplomacy. Yet what happened after the cameras left the room tells a different story. Behind closed doors, Chinese negotiators made major and reportedly asked US officials to ease export controls on high-tech goods. Ordinary Chinese citizens never heard about these discussions, nor did they learn how Yang Jiechi softened his tone once the media spotlight disappeared.

Against the backdrop of worsening China¨CUS relations, Premier Li Qiang aimed to use this summit to solidify China’s influence in Southeast Asia and expand it into the Gulf. In his , he highlighted that China, ASEAN and the Gulf Cooperation Council (GCC) collectively account for a quarter of the world¡¯s population, yet their combined trade volume makes up only one-twentieth of global trade. He framed this disparity as a major economic opportunity.

However, this vision overlooks a key reality. ASEAN, though traditionally composed of non-aligned states, has in recent years grown more cohesive in its approach to regional security and economic policy. To expand its influence, China would need to undermine that unity. In effect, Beijing seeks to from within.

China continues to rely on a bloc of loyal partners within ASEAN ¡ª namely Cambodia, Laos, Myanmar and Thailand. These governments remain deeply dependent on Chinese investment and treat Chinese capital as a lifeline. Yet despite their loyalty to Beijing, these countries wield limited influence within ASEAN.

By contrast, member states such as the Philippines and Vietnam have gained stronger leadership roles within the organization. These governments increasingly shape ASEAN¡¯s collective agenda and maintain firm opposition to Beijing ¡ª especially regarding territorial disputes in the South China Sea, which they view as vital to their sovereignty and national security.

Just days before the summit, tensions in the South China Sea again. During the meeting, Li Qiang attempted to pressure Philippine President Ferdinand “Bongbong” Marcos Jr. through Malaysian Prime Minister Anwar Ibrahim. But Marcos, who Li during last year¡¯s ASEAN+3 summit, did not back down. In fact, he verbally outmaneuvered Li, leaving the Chinese premier momentarily stunned. Anwar, caught in the middle, tried to downplay the exchange, calling it a ¡°communication that touched on the essence.¡± But the reality amounted to little more than a shouting match.

Li Qiang had hoped to sway the centrists and block a unified ASEAN stance on the South China Sea. To that end, he Indonesia before arriving in Malaysia to secure President Prabowo Subianto as an ¡°inside man¡±. However, Subianto is a political ¡°old hand¡± and has even more political experience than Li Qiang.?

At the same time as Li¡¯s visit, French President Emmanuel Macron was also in Indonesia. According to an Indonesian think tank researcher I was ironically sat next to, Subianto may have utilized Chinese financial incentives to Airbus aircraft from France, profiting from both relationships through shell companies controlled by his allies.?

China¡¯s shrinking leverage in the Global South

Given current trends, ASEAN countries are less concerned with choosing the stronger power between China and the United States than with avoiding the greater risk. Increasingly, that risk comes from China. Beijing¡¯s recent foreign policy has pushed the country toward de facto exclusion from the global economic system. While disputes between nations are common, long-term success depends on staying within the rules-based system that allows trade, investment and cooperation to continue. If China drifts too far outside that system, its development will suffer ¡ª not gradually, but sharply.

Although China now ranks as the world¡¯s economy, it has yet to construct an alternative international order of its own. Unlike the Soviet Union, which once offered a competing bloc, China lacks both the institutional infrastructure and the ideological pull to do the same. Despite launching the Belt and Road Initiative () more than a decade ago, Beijing still struggles to convince many developing nations ¡ª ASEAN members included ¡ª that joining a China-led economic order makes more sense than aligning with developed countries that promise stronger, more stable returns. For many of these nations, the real question has become whether to link their future to a ¡°poor country system¡± or to join the ¡°rich country club.¡±

At this summit, China clearly sought to woo ASEAN countries. Yet Beijing seemed to overlook a critical point: when an economy slows for an extended period, its influence inevitably declines. A decade ago, countries could grow rapidly simply by aligning themselves with Chinese markets and supply chains. But under the confrontational tone of ¡°wolf warrior¡± diplomacy, China no longer exports economic opportunity. It increasingly exports political and financial risk. Ongoing macroeconomic instability has only deepened this perception.

Beijing¡¯s global spending through the BRI has already tightened significantly. In this new climate, countries in the Global South have begun to what benefits China can still offer. The balance between competition and complementarity has shifted. China now competes directly with ASEAN nations in manufacturing and exports, eroding what used to be mutual advantages.

Li Qiang focused heavily on during the summit, but his message was met with skepticism. Since 2024, Indonesia has on Chinese electric vehicles. Vietnam new domestic protection policies. Malaysia investigations into Chinese state-owned enterprises, targeting their expansion in 5G infrastructure and freezing data development projects. These moves reflect a broader concern that Chinese companies could dominate strategic sectors without offering lasting local benefits.

Chinese state media continues to blame the United States for blocking China at the high end of the global supply chain. But ASEAN countries are asking a more pragmatic question: if the US is tightening its grip on China, do they want to be collateral damage? Would being too close to China expose them to the same restrictions? In fact, if China loses its foothold in global supply chains, many ASEAN and Global South nations may view that as an opportunity to move into the low-end manufacturing space China currently occupies.

The issued at the end of the summit reflected this cautious balancing act. At China¡¯s request, Malaysia included language suggesting ASEAN would Free Trade Zone 3.0 with China ¡°as soon as possible.¡± But without a timeline or binding terms, the statement amounted to diplomatic theater. Similarly, ASEAN added a vague call for an Israeli-Palestinian at the GCC¡¯s request ¡ª another symbolic gesture aimed at encouraging future investment from Gulf states rather than proposing any actionable policy.

ASEAN typically holds each year. The smaller one takes place in the first half of the year, while the ¡°big summit¡± in the second half draws leaders from the United States, Japan, South Korea, Australia and even the UN Secretary-General. Chinese premiers have historically preferred the larger, more prestigious meeting. Yet Li Qiang attended the smaller summit this time, likely to avoid sharing a stage with US President Donald Trump, who is expected at the fall gathering. This off-peak visit suggests that Beijing¡¯s confidence in shaping multilateral diplomacy may be fading ¡ª along with its ability to project power in the region.

The limits of ¡°wolf warrior¡± diplomacy

Li Qiang, by personality, seems more a bureaucrat than an ideologue. He appears less interested in reshaping China¡¯s global role than in fulfilling President Xi Jinping¡¯s directives. As such, his trip was a success on paper. ASEAN did promise to ¡°strengthen cooperation,¡± which allows Li to report success back to Beijing.

However, China¡¯s diplomatic corps continues to reflect the rigid nature of its political system. Unlike democratic leaders who must engage global audiences to win domestic approval, Chinese officials answer only to President Xi Jinping. Despite representing 1.4 billion people, they do not need to inform or persuade them. They owe the public nothing ¡ª even as their salaries, benefits and travel budgets come from Chinese taxpayers.

Most Chinese citizens remain unaware of what Vice Premier He Lifeng made with US Treasury Secretary Scott Bessent in Geneva this May, or what China may have conceded in ongoing trade negotiations. The government deliberately withholds these details. Instead, Chinese media portrays every summit as a resounding diplomatic victory.

Yet many Chinese citizens quietly wonder: if China keeps winning on the international stage, why do their personal lives keep getting harder? Why does their disposable income shrink while their government claims success abroad? The distance between China¡¯s diplomatic narrative and the lived experience of its people continues to grow. As that gap widens, the sustainability of Beijing¡¯s current foreign policy strategy appears increasingly uncertain.

[ edited this piece]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

The post The ASEAN-GCC-China Summit Marks the Transformation of China’s Diplomatic and Economic Strategies appeared first on 51³Ô¹Ï.

One of the most ridiculous measures came from White House trade adviser Peter Navarro, who proposed taking the US trade deficit as the numerator, dividing it by the total bilateral trade volume, and using the result as the tariff rate. This calculation ignores basic economic principles and appears in no reputable economics textbook.

China holds the bargaining chips

Objectively, Trump¡¯s shocking tariff rates made it rational and correct for Chinese President Xi Jinping not to call him. Xi knew exactly what such a call would produce.

First, China currently holds a little less than in US Treasury bonds. Trump could demand that China convert these into 100-year, interest-free bonds. He might also demand a sharp devaluation of the renminbi and ask China to adopt policies supporting the dollar¡¯s global dominance.

Both of these demands are unacceptable. In response, China began strategic preparations to counter the US tariff policy. For example, China cut oil imports from the US and turned to Canada. It began importing beef from Brazil, soybeans from Argentina and pork from Spain. In other words, it replaced US goods with those from other countries.

China’s most powerful strategic tool may be its rare earth export controls. The global supply tension in rare earths arises not from scarcity but from refining technology. China possesses the most advanced rare earth refining technology and holds at least 90% of global patents. Other countries cannot build a complete rare earth supply chain quickly. It would take at least ten years and hundreds of billions of dollars to develop. Therefore, China’s restrictions could inflict severe losses on major American industries. For example, each F-35 fighter jet requires at least of rare earths.

Columbia University economics professor Jeffrey Sachs that, as a real estate developer, Trump lacks an understanding of trade. After he announced the tariff war, global stock markets lost $10 trillion in value in just two days. If tariffs really benefited the US as Trump claimed, the stock market should have surged. Instead, in April, following the announcement, stock markets around the world fell sharply.

Trump fails to understand that trade must benefit both sides. His policy splits the world into two camps: the US and everyone else. His tariff policy puts the US at odds with the global economy.

Another negative result appeared in late April. Investors sold approximately $200 billion in US Treasury bonds globally. Japan led with $30 billion, followed by the UK with $18 billion. Other countries accounted for the remainder. China likely sold bonds too, although it did not release data. If this trend continues, US asset prices will fall, and the US economy may slow significantly.

The largest holders of US Treasury bonds are not foreign governments but US financial institutions like securities firms, mutual funds and commercial banks. If their asset values collapse, US stock markets will fall further. This pressure led Trump to suspend new reciprocal tariffs for 90 days in late April. On May 25, he extended tariff negotiations with the EU until July 9, signaling a more passive stance.

Totalitarian systems respond differently to crises

Trump’s tariff policy sparked protests across the US. Dozens of leading economists, including Nobel laureates, to the government demanding an end to the policy. Some state governments, including California, the Trump administration. US Treasury Secretary Steve Mnuchin, adviser Elon Musk and many members of Congress criticized the tariffs. Trump faced growing internal and external pressure. If this continues, Republican losses in the midterm elections could be significant. Many party members hope the Supreme Court will declare the policy illegal.

Unlike the US, China is not bound by democratic constraints. Xi does not face elections. China can afford to wait, but Trump cannot.

Trump also made undiplomatic , saying, “I am telling you, these countries are calling us up, kissing my ass.” This damaged the US’s global reputation and pushed other countries closer to China, which now appears as the defender of global trade norms.

A Chinese proverb says, “It is easy to go from frugality to luxury, but hard to go from luxury to frugality.” If bottled water rises from $1 to $2, Americans may protest. But if a Chinese worker¡¯s income drops from $800 to $400 per month, they are more likely to support the government. Chinese people have endured hardship for 70 years and are used to it. Americans, by contrast, depend on cheap Chinese goods. Sudden price hikes from switching to European products may prove unacceptable. China¡¯s political system can absorb more domestic hardship.

The tariff war benefits China in key ways

The US wants to decouple from China by rebuilding a global industrial system without it. China, which once occupied the low end of the global value chain, has moved up and challenged US dominance. Trump wants developing countries like Vietnam or India to replace China. Foreign companies such as Apple have begun moving production. But this process takes time.

Trump’s sweeping tariffs triggered rapid decoupling. Other countries still depend on China¡¯s supply chain, so China gained leverage in negotiations. Meanwhile, the US risks hyperinflation as its supply chain suffers. Political pressure on the Trump administration rises as a result.

For years, China exported goods to the US in exchange for dollars. But it could not use those dollars to buy what it needed, such as high-tech products. Now, China pays for oil in renminbi and settles trade with Russia in local currency. Holding large amounts of dollars no longer benefits China. The US external debt has reached $36 trillion. Trump even proposed 100-year interest-free bonds. China no longer wants to buy US Treasury bonds.

Some argue that holding dollars allows China to trade globally. But China is internationalizing the renminbi through bilateral swap agreements. These often include fixed-value anchors like the price of oil. If a foreign currency depreciates, the agreement adjusts automatically to preserve purchasing power.

China also lends renminbi to other countries, especially in Africa, often in exchange for natural resource collateral. Those countries then use the renminbi to buy Chinese goods. For this system to work, the renminbi must remain stable. But China must not overexploit trading partners or provoke tariffs in return.

In this context, Trump¡¯s tariffs have promoted Chinese trade with other countries. Anti-American sentiment around the world helps China attract foreign investment. China also lowers its own market access barriers. For example, the Spanish prime minister recently China and signed a large pork export deal. At the same time, Chinese battery giant Contemporary Amperex Technology Co. Limited (CATL) announced a major investment in a factory in Spain.

The tariff war also reduces China¡¯s fear of US sanctions if it takes military action against Taiwan. If China chooses to decouple fully, it has less to lose from tariff penalties. From a geopolitical perspective, this gives Beijing more room to act.

The US has historically helped China¡¯s ruling Communist Party during times of crisis. President Harry Truman sanctioned the Kuomintang and indirectly aided Mao Zedong. President Jimmy Carter broke relations with Taiwan and welcomed Deng Xiaoping. President Barack Obama sent Secretary of State Hillary Clinton to China in 2012, facilitating ³Ý¾±¡¯²õ rise.

Whether Trump, as a Republican, will once again help the Communist Party survive is worth watching.

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial?policy.

The post China Turns Tariff War Into Strategic Opportunity Against United States appeared first on 51³Ô¹Ï.

Explicit and implicit debt

Firstly, it is necessary to clarify that the debt mentioned in the article is not the same type as in the ¡°¡±, which has essentially become a buzzword in the international geopolitical arena. The so-called “debt trap” mainly refers to China’s external sovereign financing to other less-developed countries (LDCs). In contrast, the debt referred to in this article is China’s . More specifically, it mainly refers to the debt of Chinese local governments. At the same time, the Chinese government’s debt reduction plan is also aimed at local government debt rather than the debt undertaken by the central government.

To date, although China’s mainstream media is still doing its best to build a positive image of China¡¯s economy and block all negative news, some clues about the true fundamentals can still be sniffed out from data released by the National Bureau of Statistics of China. For instance, according to the data, in 2016 there were merely six developed provinces that maintained fiscal surpluses; by the end of 2024, there were only two. The remaining 35 provinces were all in fiscal deficits. Despite being the leading economic province among all 37 provinces of China, Guangdong’s fiscal deficit reached 210 billion yuan (US$28.7 billion); similarly, Zhejiang ¡ª the second leading province ¡ª had a fiscal deficit was more than 90 billion yuan (US$12.3 billion), and Beijing ¡ª the third ¡ª had a deficit that exceeded 90 billion yuan. Likewise, Sichuan, located in the southwest and considered the leading economic province in Western China, had the largest fiscal deficit of all, with 410 billion yuan (US$56.1 billion) in 2024.

In addition to the drastic decline in government tax revenue, the main cause for the sharp increase in China’s local fiscal deficit is the depletion of the ¡±¡ªthe rapid shrinkage of local land transactions. In 2024, China’s land transaction revenue was only equivalent to 50% of that in 2021. As a result of the main sources of fiscal revenue gradually shrinking, local governments have been compelled to rack their brains to explore new methods to increase their revenue. In this respect, in 2024, local governments¡¯ total ¡°non-tax revenue¡± increased by 25% year-over-year. Furthermore, some local governments even disposed of massive fixed assets to increase liquidity. Some others did their best to charge and impose fines, regardless of the impact of such reckless behavior that disregards the rule of law on the local business and/or investment environment. In some extreme and absurd examples concerning the criminal or civil judicial cases involving local areas, some local governments only arrested suspects from other cities, while giving local suspects light sentences, as they were worried that these cases would affect the operation of local enterprises, particularly tax revenue collection for local governments. In , the governments have even traced back 30 years of tax evasion allegedly committed by enterprises, subsequently ordering them to pay back the taxes they should (or should not) have paid 20 or 30 years ago, along with high fines.

Nevertheless, the paradox of China¡¯s debt issue seems to be that, on the surface, the overall debt ratio of China’s government does not seem to be extremely high. In 2024, the central government’s debt was 30 trillion yuan, and the local government’s debt was about 40 trillion yuan, both of which accounted for only 55% of the total GDP. Incidentally, in the United States and Japan, this figure exceeded and , respectively. However, many observers have overlooked a key factor¡ªthe leverage ratio of government finances, which has been largely ignored for a long time.

In fact, 40 trillion yuan of the debt of China¡¯s local governments is only the ¡°explicit debt¡± (ED) ¡ª debts that are formally recorded and payable. In reality, local governments also hold a sizable amount of ¡°implicit debt¡± (ID) that is obviously understated and difficult to estimate. As for this part (ID), the total balance that is announced officially is 13.4 trillion yuan. By contrast, some Chinese economists estimate it to be around 40 trillion yuan. In this respect, the data obtained by the author from channels that temporarily cannot be made public is that the most accurate figure should be¡ª60 trillion yuan. Therefore, the main target of the Chinese government’s 10 trillion yuan debt reduction plan is essentially pointed at the ID instead of the ED.

The root cause of the implicit debt

The emergence of implicit debt is a long story that can be traced back to the fiscal relationship between the central and local governments in China¡¯s history. Since ancient times, there have been continuous conflicts between China¡¯s central and local governments over financial and administrative power. Since Qin Shihuang (ÇØʼ»Ê) unified China and established a centralized institution in 221 BC, the contradiction of central and local power allocation has never been eliminated. On one hand, centralization represents the top-level ideology and administrative decision-making power. On the other hand, local power thus becomes a relatively broad concept, as it is on behalf of a huge bureaucratic system that specifically implements centralization nationwide. In thousands of years of China¡¯s history, the relationship between the two has been ¡°as one falls, another rises,¡± and vice versa. Therefore, the competitive relationship between centralization and local power has almost determined China’s economic development model over the past thousands of years.

As an example, the Tang Dynasty (618-907) formed a pattern of ¡°weak central government and strong local government¡±, until finally the power of local governments even threatened the stability of the central government. Given this, the Ming Dynasty (1368-1644) began to vigorously strengthen the power of the central government, ushering in an era of ¡°strong central government and weak local government¡±. The benefit brought by this is the stability of the central government, but it simultaneously stifles the vitality of the private economy and the diversification of social development. In other words, the fundamental purpose of the continuous adjustment between centralization and local power is aimed at enabling local forces to obtain sufficient rights and interests while simultaneously ensuring the central government’s control over the regime and economy. This is a longstanding major contradiction in the history of China’s economic development. In contemporary economic terms, it could be interpreted as stimulating the private economy and high-quality local development while maintaining the strong centralization and macro-control capabilities of the central government at the same time.

More recently, since and thereafter, the most critical measure in adjusting the relationship between the central and local governments is the that took place in 1993. Prior to the tax-sharing reform, the fiscal revenue of China¡¯s central government amounted to only 25% of the country¡¯s total fiscal revenue. Instead, local governments shared as much as 75%, making the fiscal strength of local governments significantly stronger than that of the central government. Consequently, local governments took advantage of the reform and opening up policies in 1979, which prompted China to partially get rid of the original planned economic system. In other words, to promote local economic development, the central government began to gradually delegate power to local governments since 1979, and local governments began to independently formulate budgets and enjoy a certain degree of fiscal control.

Later on, the tax-sharing reform of 1993 once again broke this even. Since then, the income distribution ratio between the central and local governments has gradually changed to 50/50. However, this consequently caused a serious imbalance in the division of power and responsibility between the central and local governments, which laid a huge hidden danger for the subsequent development of China’s economy.

The primary aim is to adjust the income distribution radio evenly between the central and local governments.However, the responsibilities on local governments¡¯ shoulders are apparently heavier than those of the central government, since the task of promoting local economic development mainly lies on local governments. Slowly but surely, the result of this kind of uneven distribution is that in the situation of limited resources available, only those provincial government officials who could do a better job in the local economic development are more likely to get a chance to be promoted. Consequently, it leads to the rise of the so-called ¡°¡±, a term often used in Chinese media to refer to the breathtaking competition between localities. 

In essence, such a development strategy is a strong reflection of China’s long-term ¡°top-bottom¡± political institution, that is, government officials only have to be responsible to their upper level. As for the lower level, it usually does not involve them. As one can imagine, the most direct way to exhibit their achievements to the upper level is how much GDP has grown and how much the output value of local enterprises has expanded. Incidentally, this is also the essential reason why China’s economic development concept has long emphasized investment over consumption, enterprises over people’s livelihoods and land assets over technological advancement.

Naturally, under such an economic development strategy, local economic development must require a large amount of fiscal expenditure and public spending. This finally leads to the fact that the local fiscal expenditure in total accounts for more than 80% of the national fiscal expenditure at its peak. In other words, the central government leaves half of the fiscal revenue to local governments, but the latter have to bear 80% of the responsibility for China¡¯s economic development, which substantially increases the burden of local governments.

Therefore, in order to stimulate the enthusiasm of local governments and the longevity of local economies, the central government began to assist the latter in making up for the fiscal gap through increasingly large subsidies (also known as the ¡°payment transfer¡±). As for the central government, this approach can balance the differences in revenue and expenditure among different regions, while still maintaining the power in its own hands. However, due to the limited total amount of the subsidies, the payment transfers can only meet the regular fiscal expenditure needs of local governments. Particularly, the funds are only allocated to the provincial level. The fiscal conditions of most cities and counties are still not guaranteed. Therefore, the central government once again invented two important policy tools: one is to allow all of the income from land sales to remain in the local finances; the other is to gradually designate local governments the right to issue local bonds. In connection with the payment transfer tool, ultimately, three major ¡°wallets¡± of local governments have been officially formed: local government bond issuance, central government subsidies and land finance.

Debt resolution with ¡°China¡¯s characteristics¡±

In practice, as a matter of common sense, debt cannot be issued without limits and cannot grow incessantly, which has already become a consensus of almost all countries worldwide. In reality, not only does the US government have a strict debt ceiling, but the Chinese central government also has a clear red line for local governments, requiring that most of the debt issued by local governments must have a specific purpose. Yet, in 2008, a sudden global financial crisis broke the original calm and disrupted China¡¯s macroeconomic control plan, forcing China to rely on large-scale investment to stimulate the economic recovery. However, investment requires money. Therefore, in 2009, then Prime Minister Wen Jiabao launched the ¡°4 trillion yuan¡± economic stimulus plan. Specifically, the government would input 1.2 trillion yuan into the pool, and local governments would input the rest 2.8 trillion yuan. Nevertheless, if the local governments cannot come up with sufficient funds, the plan would ultimately face the fate of failure, which would damage not only the credibility and prestige of China¡¯s central government, but also China¡¯s economy itself. At the time, China¡¯s economy had indeed reached a point where it had to be saved. From another perspective, the central government is still significantly wary of increasing the debt ceiling of local governments, fearing that this move would cause it to lose control over local government¡¯s finances. At last, the central government once again innovated and set a precedent for local governments to invest in the establishment of government-controlled companies (often referred to as ¡°¡± or GPC) to conduct commercial financing in the name of the companies.

Apart from GPC, a series of other stopgap measures were taken synchronously to deal with the macroeconomic stagnation after the global financial crisis of 2008. Applied to China, GPC not only helped resolve the negative impact of the financial crisis but, most importantly, this innovation allowed the local governments to taste the happiness of ¡°pie in the sky¡± for the first time ¨C obtaining a large amount of financing easily and quickly. Thus, increasingly, even after China completely overcame the 2008 financial crisis, this ¡°innovation¡± quickly became a long-term institutional arrangement. 

Theoretically, the financing of GPCs does not belong to the direct debt of local governments, therefore, they are not counted as local debt in the balance sheet of local governments. Nonetheless, local governments are still standing behind the scenes and have to bear the ultimate debt service obligation, to be the last line of defense. What is more, due to the complexity of the borrowing entities, equity structure, the use of funds, etc., the total amount of this type of debt is hard to calculate accurately. For example, when a GPC borrowed 100 million US dollars from a bank, 70 million was spent on urban greening construction, and the remaining was used for other commercial projects with economic benefits. In this case, how much of the 100 million yuan should be considered local governments¡¯ debt and how much of it should be classified as commercial debt, become an enigma cannot be explained clearly.

Eventually, the inability to be distinguishable precisely leads to unclear definitions, which in turn leads to incentive conflicts and regulatory loopholes. Together with the intense competition for regional GDP growth between local governments, the implicit debt has rapidly expanded since 2008 and has eventually become the biggest gray rhino in China¡¯s economy.

In fact, since the beginning of the golden age of China’s large-scale infrastructure construction and rapid real estate sector development in the 1990s, objectively speaking, the GPCs have indeed made great contributions to the soaring of China¡¯s regional economy. Large-scale infrastructure construction has been naturally indicative of higher housing prices, which in turn has constituted a continuous increase in land sales revenue and high income has finally induced the next round of large-scale infrastructure construction. Step by step, this circulation becomes a game that one can’t stop playing. Once stopped, everybody dies. As a result, local explicit and implicit debts together have increased massively, like a car speeding on the highway with a flat tire. Once stepping on the brakes, the consequences will be disastrous.

However, the 10 trillion yuan debt reduction plan is simply not sufficient to cover all the implicit debts of those local governments at present, and the central government is very well aware of this. Therefore, essentially, what the central government intends to do is not to assist local governments in repaying all the debts, but to help to ¡°delay¡± them. This is usually materialized by replacing short-term, high-interest implicit debts with long-term, low-interest explicit debts. 

Specifically, 10 trillion yuan from the central government is divided into two parts as “6+4”. Firstly, the central government will allow local governments to increase the issuance quota of 6 trillion yuan of local bonds in the next three years. In other words, it allows local governments to issue 6 trillion yuan more explicit bonds. The purpose is to allow local governments to maintain the ability to continue financing and repaying part of the old debts owed by GPCs. For the remaining part, 800 billion yuan will be arranged from the newly added local government special bonds each year for debt repayment for five consecutive years in the future, a total of 4 trillion yuan in five years.

It needs to be explained that the local debt of China is usually divided into and special debt, of which special debt accounts for the vast majority. The special debt is mainly for specific purposes and is generally invested in profitable projects. However, after decades of economic reform and opening up, projects with high returns and high yields are already becoming increasingly hard to find in China. Thus, it becomes a difficult task for local governments to put a large amount of special debts onto the market currently. As for the local governments themselves, they are also wary of the high risks of investing funds in projects with uncertain development prospects. Finally, they often simply set aside a part of it for debt reduction, turning the implicit debt held by the GPCs into explicit debt owed to the bank.

In conclusion, the most direct purpose of the so-called debt reduction of China¡¯s government is to prevent the debt from exploding in the short term. Through the implementation of the above-mentioned instruments, they will save local governments about 600 billion yuan (82.1 billion US dollars) in interest expenses over the next five years, which is equivalent to reducing the monthly debt service pressure of local governments while keeping the principal unchanged. Although this cannot solve the fundamental contradictions in China’s economy, it can give China’s already exhausted political and economic system precious breathing space in the short term. However, from another perspective, the cost to pay for such breathing space is also enormous. That is, the debt reduction plan puts the cart before the horse: it not only could not make the debt disappear, but it is very likely to be a tool to continue to increase the total scale of the explicit debt.  

The road ahead for China’s debt issue

To date, China¡¯s government has already taken a series of measures to try to resolve the debt crisis, yet if the following problems are not properly resolved, the debt crisis will always linger like a shadow and may even become an important force that overturns the Chinese economy which has been sailing smoothly for half a century.

First and foremost, China’s debt reduction plan is essentially to use more debt to solve the existing debt. At present, due to several factors such as national defense, aging and social security expenditure pressure, the overall fiscal expenditure pressure of China¡¯s government will continue to rise in the future. In particular, when the serious overcapacity issue in many industries no longer supports China’s continued large-scale repetitive investment, how to make the increased liquidity truly play a positive role in promoting sustainable economic development is a conundrum that must be solved.

Second, state speculation. Suppose there is a small town somewhere in the world. Because of the declining income, the residents of the town have already substantially lowered their consumption. At the same time, housing prices started to fall sharply because all the residents had long been in debt due to real estate speculation. In the town, there is a restaurant. Due to the weak consumption, it has no money to pay the 100 yuan owed to the butcher shop. Similarly, the butcher shop is not able to pay back the 100 yuan owed to the pharmacy. Simultaneously, the pharmacy also owes the cloth shop 100 yuan. In this way, one link after another, the whole town falls into a vicious cycle due to lack of liquidity. No one consumes, thus those shops businesses gradually become worse and worse. All of a sudden, a tourist passing by the town spent 100 yuan on a meal in the restaurant. Then, the restaurant could pay 100 yuan back to the butcher shop. Gradually, everyone’s debt was settled, and each of them could breathe a sigh of relief. People of the town began to hang out and consume again, and the town’s economy finally regained vitality. At the same time, the son of the butcher shop owner married the daughter of the pharmacy owner because now he had money again. Not only did the two live a happy life, but they also had children, which led to an increase in the town’s fertility rate and a decrease in the aging population.

In Q³ of 2024, the 10 trillion yuan of funds from China¡¯s central government is commensurate with injecting 100 yuan of liquidity into the town. Nevertheless, the biggest challenge is that if the restaurant does not repay 100 yuan to the butcher after receiving it and instead speculates in the stock market or real estate market, then the ending of this story will be a completely different one. In other words, whether the injection of 10 trillion yuan can be centred around the real economy and truly increase the income of ordinary Chinese people, or if it will once again become a new round of speculative capital for vested interests will be a key factor in determining whether China¡¯s economy can truly get out of the current plight.

Third, fairness. To further foster consumption, some developed countries, such as the USA and Japan, have sometimes issued consumer coupons and other forms of cash equivalent subsidies to their citizens, especially those at the bottom of society. Although China has also begun to imitate similar policies since Q¹ of this year, the recipients in socialist China only include civil servants who already belong to the high-income group. For example, at the beginning of this year, the central government began to massively raise the salaries of civil servants, irrespective of the fact that more than one billion ordinary Chinese people are still living in dire straits.

If the Chinese government insists on continuing to abandon 1.3 billion ordinary Chinese people and believes that increasing inequality of income distribution of 1.4 billion Chinese will surely be able to boost overall consumption, then in the end, it is probably only a matter of time before the Chinese economy falls further into an endless abyss in the future.

Certainly, the problems facing the Chinese economy today are not just debt. For instance, another chronic institutional flaw in China is the household registration system. In general, through two major tools of tax-sharing system and household registration system, China¡¯s government has kept most of the tax revenue in the cities, making workers with township household registration and non-local household registration the target of blood sucking for a long time. This has ultimately led to a huge urban-rural income disparity ¡ª another underlying factor that caused the current setback of the Chinese economy.

In short, the top-down institutional structure with the so-called ¡°Chinese characteristics¡± that lack checks and balances and error correction mechanisms is the main fuse for the stalling of China’s economic engine. Among all the factors, debt is the most fatal one in a series of pseudo-market economic mechanisms to the short-term survival of the Chinese economy. In the long run, if China’s economy intends to jump out of this downward tendency and volatile economy, in addition to solving the current debt crisis, an overall institutional transformation is crucial, including a more liberal free market, strict protection of human rights, property rights, freedom of speech, full competition, an independent judicial system, etc.

All in all, development is far more comprehensive than GDP growth alone, and GDP is by no means everything. Without more modern, scientific and humane system institutions, there can be no real development for China.

[?edited this piece.]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

The post The Enigma of China¡¯s Debt Crisis ¡ª Explained appeared first on 51³Ô¹Ï.

Even as a major gold medalist, China demonstrated the shortcomings of its ?centralized, whole-nation system. First, China Central Television did not even dare to broadcast the men¡¯s badminton team final between mainland China and Taiwan. Then, in the ¡°Chinese Civil War¡± of the women’s singles table tennis final, Chen Meng, the winner, was abused, ridiculed and insulted by most Chinese fans, media, and even the coach of the Chinese national table tennis team.

It seems like even with the progress of sports performance, the level of civilization of China and the Chinese people under the leadership of China¡¯s Communist Party (CCP) is declining step by step. In this article, I will try to explain from an economic point of view why this is happening. The task of economists is to use economic theories to reveal the origins of social phenomena, craft better approaches and thus promote the development of human society. 

Economics can improve belief systems

Generally speaking, economics is considered a discipline that studies interests, resource allocation and market equilibrium. Economics believes that human behavior is dominated by interests. Rational people know where their interests lie and thus will pursue their interests rationally. Therefore, human behavior can be reasonably explained by interests.?

However, if this assumption is correct, then many things cannot be explained. For instance, why did more than one billion people unanimously choose the system even though it brought serious disasters to China from the country¡¯s in 1949 to the in 1978? We also cannot explain why a Spanish badminton player insisted on playing with an at the Paris Olympics. Although she eventually withdrew from the competition, her spirit still won warm applause and cheers from the audience.

Therefore, this reveals that thoughts and concepts, not just interests, influence what people choose to do. Analogously, people usually understand their interests through concepts rather than letting their interests govern their thoughts. More than one billion people chose a devilish planned economic system and centralized political system not because it aligned with their interests, but because they believed that such a system could bring them benefits.

Following this logic, we should acknowledge that all human progress should come from the advance of new ideas and concepts. The task of economics is to change people’s so they can better understand their fundamental interests. In contrast, Chinese athletes under the leadership of the CCP have not changed their understanding of progress. In some cases, their beliefs have regressed sharply. This also shows that in the history of human society not every step we take is progress. Often, human beings¡¯ civilization and ideology have been regressing.

China¡¯s economy and ideologies remain a closed, restricted system

Over the past half-century, China’s GDP has grown rapidly. However, China has not aimed to integrate itself into the world. Considering the perspective of Chinese government policies, it seems like China is a country that actively advocates the integration of global human destiny. President Xi Jinping has even put forward the of ¡°a Community with a Shared Future for Mankind.¡± But in reality, the CCP has always done things that ¡°do not match words with deeds.¡±

Fortunately, there are still a few economists with conscience in this old country. Since the economic reform and opening up in 1978, the most remarkable and vital contribution made by some Chinese economists to China’s development is that they have aroused more and more Chinese people to the concept of the economy. Some Chinese economists have awoken most Chinese people to break the superstition of a planned economy and made people no longer believe that egalitarianism is a good system. Instead, more people have begun to realize the importance of free competition, free prices, private property rights and entrepreneurship, which are all indispensable and crucial for economic progress.

But paradoxically, as China’s economy has achieved far-reaching success, CCP¡¯s ideologies have been regressing at a fast pace. The deep-rooted reason for this phenomenon is that, although the economy has experienced half a century of rapid development, there is still no independent spirit and no real freedom in Chinese society.

One example of this is the way China approaches the , which is when one seller or company dominates the market and pushes out all competition. Nowadays, almost all countries in the world have anti-monopoly rules and laws. But in fact, many so-called monopolies opposed by China’s anti-monopoly law are true competition. The reason for this is closely related to the government’s wrong definition of competition and monopoly.

Since the Olympics allowed American professional NBA players to participate, the US basketball team has only lost one game in the Olympics. But in the Paris Olympics, these American NBA professional stars with annual salaries of tens of millions to Serbia and missed the final. In contrast, the Chinese women’s hockey team can easily make it to the final even though they have trained in a country where most people have never touched a hockey stick.

Is the breaking of NBA stars¡¯ ¡°monopoly¡± on international basketball arenas due to the International Olympic Committee¡¯s Anti-Monopoly Law? Apparently not. It is due to full competition and a free market. And is the impressive performance of the Chinese women’s hockey team due to the general improvement of the physical fitness and health of 1.4 billion Chinese people? The answer, of course, is also negative. It stems from breaking the market economy mechanism and advocating a ¡°whole-of-nation¡± system that lacks competition.

Thus, in reality, there is only one kind of monopoly we must actively oppose, which is the monopoly imposed by the government. Free competition will never produce a real long-standing monopoly. For instance, the worldwide monopoly of the Chinese team in table tennis and diving is precisely because the Chinese government artificially protects these two sports and does not allow its high-level players and coaches to communicate  with other countries, so China has formed a monopoly on these two sports.

China must allow for free thought

In addition, I would like to emphasize a particular kind of monopoly ¨C the monopoly of thoughts. That is, the phenomenon where one kind of thought dominates everything in a country, no other thoughts can compete with it, and no one else can propose a different thought. In most cases, when many Chinese athletes are interviewed after winning gold medals, the first sentence must be to thank the CCP and the government. Otherwise, what awaits them when they return home will be the deprivation of their interests.

The monopoly of thought is disastrous to human civilization because the absence of thought competition will hamper the emergence of new ideas and the progress of human civilization as a whole. In any era, as long as thoughts are free, mankind could make obvious progress. If thoughts were forcibly restricted, the pace of human progress would stagnate. Moreover, the progress of human ideas must start from many different people from various social classes. If the thoughts of a few elites in a country are tightly bound, and even subservient, to the interests of the party, then society cannot make real progress.

Going back to the Paris Olympics badminton men¡¯s doubles final, with mainland China vs. Taiwan, China Central Television (CCTV) did not even broadcast the event live. What is CCTV afraid of? Is it afraid of the overwhelming shouts of ¡°Taiwan¡± and ¡°democracy¡± from fans all over the world (except those from mainland China) on the sidelines? In its feat of ideological legacy building, why does the CCP force 1.4 billion Chinese people to repeatedly learn the so-called China¡¯s modern ¡°four confidences¡± (Path Confidence; Theoretical Confidence; System Confidence; Cultural Confidence) all day long, but all of a sudden, become so unconfident in the face of just a badminton match?

If the ideas of 1.4 billion Chinese people continue to develop in this direction, then the whole world would see an absurd but sad ending; that is, there will only be two kinds of human on this earth: one is ¡°human¡± and another one is ¡°Chinese human.¡±

This will be the greatest misfortune in the thousands of years of development of China¡¯s civilization.

[ edited this piece.]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

The post China’s 2024 Olympics: progress in gold medals, regression in concepts appeared first on 51³Ô¹Ï.

US may lose the dominant position in the US-China ¡°competition¡±

Over the past half-century, due to its so-called advantages such as autocratic politics, the whole-nation system and unfair competition, China has developed rapidly in the fields of economy, science and technology. However, China’s bandit development logic over the years has also caused extreme dissatisfaction among most democratic countries in the world. This includes, most importantly, the US.

In 2018, under the impetus of President Donald Trump¡¯s administration, Western countries led by the United States launched a ¡°¡± against China. Since the US holds the most powerful weapon in global trade ¡ª the dollar ¡ª China has been forced into a very passive position regarding global trade. However, it is unrealistic for the US to defeat communist China with a few trade barriers. The competition between major powers is often a long-standing game that depends not only on who has the bigger fist but also on who has a stronger determination.

However, no one expected that in a few years, the US macro-economy would be in trouble. , the US has experienced severe inflation. Usually, this requires the Fed to raise interest rates, but this is not the case. With the US debt hitting new highs, breaking through the mark at the end of 2024, the Fed is forced to lower interest rates in order to halt the debt pressure.?

If the Fed continues to cut interest rates, the advantage the US dollar has accumulated over the years will disintegrate more quickly. Many countries are now promoting a ¡°multi-currency¡± settlement system under the active advocacy of China. China is also eroding the original advantages of the dollar bit by bit. Last August, as soon as the news of the Fed’s upcoming interest rate cut was released, the renminbi by more than 1,000 basis points within just one week. It can be said that the losses the renminbi suffered due to past US interest rate hikes were all compensated at once.

China is about to reap the US in reverse

The US is currently at a crossroads: raising interest rates is not feasible with the current debt situation, but lowering interest rates further will cause extreme consequences. First, when the dollar depreciates, or loses value, capital suddenly becomes the most mischievous troublemaker. Investors are likely to go to other places such as China to find better investment returns. Capital is profit-seeking, and investors will go wherever the profit is higher. This means that more dollar funds would flow into China. 

Second, if the renminbi appreciates, or increases in value, it will boost the real purchasing power of Chinese consumers. This will substantially minimize the Chinese people’s dissatisfaction with the government.

Third, there is a deeper “” brewing behind the scenes. The dollar’s global dominance has caused other countries to offload dissatisfaction onto the dollar. In other words, dissatisfaction with US monetary policy has reinforced China¡¯s ability to challenge the United States to a certain extent.?

Fourth, although the depreciation of the dollar might result in sluggish exports for China, the appreciation of the renminbi may buy China more bargaining chips in the global game. 

The macroeconomic situation of the US is not very optimistic. Under such circumstances, the turmoil brought about by this wave of interest rate cuts in the US may open up more strategic opportunities for China. Therefore, in the coming year, any minor strategic mistake in US monetary policy is likely to lead to a fierce and fatal counterattack from China, which has been eyeing the US for a long time.

[ edited this piece.]

The views expressed in this article are the author¡¯s own and do not necessarily reflect 51³Ô¹Ï¡¯s editorial policy.

The post China May Now Dare to Challenge the US Dollar appeared first on 51³Ô¹Ï.