Tag Archives: china

coal and China

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Yale Environment 360 explains the situation with coal use in China.

Paradoxically, China is at the same time the biggest installer of renewable energy, the biggest emitter of greenhouse gases, and the biggest user of coal. One explanation for this conundrum is a national concern over energy security: Coal is the only fossil fuel that China is not obliged to import, either through vulnerable pipelines or along sea routes that pass through precarious choke points like the Straits of Hormuz. China has an abundant supply of coal, boasting about 13.3 percent of the world’s recoverable coal reserves, and, importantly, it is the one fossil fuel that Chinese planners know will remain abundantly available, regardless of any tensions in China’s East Asia region or military action in the Middle East, the region that supplies China with nearly half its oil. This means that despite China’s role as a renewable energy superpower, coal has continued to play a leading role in its energy system. 

They talk about a decrease in “energy intensity”, which is energy use per unit of GDP. So the economy is growing, energy demand is growing, and renewables and battery technology are able to keep up with some but not all of that growth. Hydroelectric is a big part of their energy strategy, and that has been affected by drought recently. There are also complicated reasons why their grid is not run as efficiently as it could be.

My main impression is that it all sounds so…rational. Compared to the U.S. government which at the moment appears to be corrupt, immoral, and just bat-shit crazy.

deflation and oil price shocks

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In fast-moving current events as I write on March 22, 2026, the insane, illegal war of aggression started by the US in Iran (okay, maybe started by Israel, but it was the choice of the US and our mad leader to enable it) continues to escalate. We have talk of ground troops. We have talk of intentionally targeting civilian water infrastructure, which is a massive and unambiguous violation of international law not to mention common morality. There has been idle speculation at least about the use of nuclear weapons. I hope there will not have been a nuclear exchange by the time you read this. If the world is going to get past this moment and move on to a path leading back toward eventual normalcy, this has to end and the people who caused it have to be held accountable. And now, back to regularly scheduled programming…

This article suggests that the oil price shock caused by Russia’s invasion of Ukraine in 2022 played a role in snapping Japan out of decades of deflation, and that the current shock caused by the Iran war could do the same for China.

Recently I posted a contrarian analysis suggesting that China’s deflation is not a true recession, but rather evidence of a sudden acceleration in manufacturing productivity. This article presents the more conventional picture:

Since the country’s COVID-19 reopening in late 2022, a manufacturing glut and sluggish consumer demand have led to intense price wars that eroded company profits and slowed wage growth.

Where am I going with all this? I don’t know yet – it is something I am struggling to understand.

Is China going through an economic slump or a second industrial revolution?

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The rate of GDP growth in China is slowing, and prices for consumer goods are dropping. This article from Warwick Powell argues that the situation is not an economic problem at all, but rather caused by a sudden acceleration of productivity analogous to a period of rapid industrial progress in the west from about 1870 to 1890.

The period from roughly 1870 to 1890 in the industrialising world is often called the Great Deflation because consumer and producer prices fell steadily for nearly two decades. Yet this was simultaneously a period of rapid industrial expansion: steelmaking, railways, shipbuilding, chemicals, and textiles all experienced extraordinary increases in output, fixed capital formation, and labour productivity. Real wages also rose, even as nominal prices and, in some cases, nominal wages remained flat or declined. Conventional monetary interpretations – where deflation is associated with falling demand, recession and financial stress – don’t explain this apparent contradiction.

The key is that this deflation was supply-led. Massive technological change (Bessemer steel, open-hearth furnaces, mechanised weaving and rail distribution networks), dramatic extensions of energy inputs (coal and steam), and economies of scale fundamentally changed production cost structures. Unit costs fell faster than aggregate demand could absorb the increased output. Prices therefore declined not because the economy was weak, but because the production system became structurally more efficient. This is what we could call “good deflation.” An excellent paper by Borio et al., (2015) explores this in more detail…

China’s current economic conditions – marked by soft consumer prices, prolonged factory-gate deflation and extraordinary expansion in clean-energy and advanced-manufacturing output – mirror the paradox of the Great Deflation of 1870–1890. Then, as now, falling prices were not signs of contraction, but the surface expression of deep productivity shifts and sectoral transformation. China today is experiencing a similar structural reconfiguration.

In our high school (U.S.) history classes, we tend to learn that the late 19th century was a time of rapid technological and industrial progress, but that was also coupled with rapidly growing inequality, labor unrest, and unregulated pollution. Maybe China’s system and leaders will be able to reap the benefits of progress while keeping these problems under control. My thinking is authoritarian political and economic systems can appear to work better than democratic capitalist systems when they have leadership in place that is rational and genuinely has the citizens’ best interests at heart. This might actually describe the majority of authoritarian places and points in time. But then they don’t have the safeguards in place to stop bad leadership from metastasizing if and when it does pop up, and that is how you get history’s worst and longest-lasting geopolitical disasters. I’m not guaranteeing the U.S. has the immune system to successfully fight off our currently spreading political and economic cancer, only time will tell.

“dark factories”

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The first time I heard “dark factories”, I pictured the orcs toiling underground at Isengard (that’s Lord of the Rings for any readers who are not the right type of nerd to know that). I also think of Philip K. Dick’s story Autofac, one of my all time favorites. But no, the idea is that factories are emerging in China that are so automated that the lights don’t need to be on most of the time, because no humans are present. Naked Capitalism has a ton of links describing this phenomenon in China. Apparently U.S. industrialists are touring these Chinese factories and are shocked at how advanced they are and how far behind they (i.e., western industry) are.

The fact that western industrialists are invited to tour these factories would suggest that the technology is not secret. So maybe we should not feel threatened but rather look for opportunities to partner and learn. No doubt, there are similar factories churning out military and security hardware that are secret.

toilet rats, and a Singaporean perspective on Asia at the end of 2025

The two things in my title are only loosely related, and here’s how. The Guardian has a gleeful article about toilet rats in the (US) state of Washington. Indeed, this does seem like a pretty good indicator of US decline. Nonetheless, I have one personal experience with a toilet rat, and it was in Singapore. Older-style public restrooms (confusingly for American tourists, called “toilets” as they are throughout most of the world) sometimes have squat toilets flush with the floor rather than western toilets that you sit on. This is a traditional Asian style of toilet, only the modern squat toilet is collected to a modern sewer system rather than just a hole in the ground. Anyway, I was in the restroom/bathroom/toilet when a rat came out of a little hole in the floor, either not noticing or not caring that I was there. I stamped my foot just to let the rat know that I was by far the larger and dominant mammal in the room, and the rat reacted by diving directly into the toilet and down the drain. And it was gone. So I assume it just swam for a bit until it got somewhere with air, and returned to whatever it was doing after I left. Anyway, the advice in Washington State is if you see a rat in your toilet you are supposed to flush the toilet or close the toilet lid. I would not do either of these things because rats are FAST, they are afraid of people, and they have sharp teeth. I think I would calmly close the bathroom door and just peak in after an hour or two to see if it chose to go back where it came from. And I might keep the toilet lid closed after that.

I have been in actual sewers in the United States, and I have seen rats. Sewer rats are plentiful. They don’t want anything to do with us humans, they just scurry away if they see us coming. I have never seen or heard of one coming into a person’s house through the plumbing. So the article seems a bit alarmist to me. Mice are another story. I just wiped some suspected mouse poop off my kitchen counter this morning, which is gross and a disease risk. Anyway…

The connection between Singapore and rats is that Singapore, which has a reputation as possibly the world’s most sparkling clean very dense city, is not perfect. There is trash and there are rats, like any other city. Singapore, and its experts, have a certain self-endowed swagger. Now Singapore really is pretty clean, and its experts really are pretty smart, which brings me to my point that Singapore is pretty good but not perfect. So anyway, here is what a Singaporean expert, George Yeo, with a lot of credentials says is going on in Asia at the end of 2025. It is one person’s opinion but also a uniquely Asian perspective and different from what we hear from the US government/media/nonprofit “blob”. The article is from Hong Kong-based South China Morning Post by way of Yahoo, so also keep in mind the possibility of censorship and/or self-censorship (as you also certainly should with the US blob).

  • If it ever becomes clear that the US will not continue to support Taiwan, China will take over Taiwan. Taiwan will not fight a war it will obviously lose leading to its own destruction and loss of a generation of its young people. Right now the US and China are sort of avoiding talking about this and trying to actively suppress others (like politicians in Taiwan and Japan) from talking about it, and this is essentially a continuation of the long-term status quo.
  • When we hear about large weapons sales from the US to Taiwan, there is an unspoken arrangement that these weapons are considered defensive and do not cross a certain line. The US is seen to be supporting Taiwan, China is seen to be outraged, and both sides get their propaganda win without serious escalation. Again, it’s the long-term status quo.
  • Another reason weapons will not cross a certain line is that the US will not provide weapons where it has a technological lead. “Knowing that many Taiwanese are blue, the US cannot be sure that advanced technology supplied to Taiwan will not quickly leak into China. The military technology supplied to Taiwan is technology the US can afford to lose to China.” [Wikipedia: “The Pan-Blue Coalition, Pan-Blue force, or Pan-Blue group is a political coalition in the Republic of China (Taiwan) consisting of the Kuomintang (KMT), the People First Party (PFP), the New Party (CNP), the Non-Partisan Solidarity Union (NPSU), and the Young China Party (YCP). The name comes from the party color of the Kuomintang. Regarding the political status of Taiwan, the coalition primarily maintains that the Republic of China instead of the People’s Republic of China is the legitimate government of China. It also favors a Chinese and Taiwanese dual identity over an exclusive Taiwanese identity and backs greater friendly exchange with mainland China, as opposed to the Pan-Green Coalition which opposes Chinese identity in Taiwan.” This also, if I am not mistaken, is the status quo position going back many decades.]
  • “There is growing realisation that the road to independence is a dead end…If the young people of Taiwan build their hopes on an illusion – as the young people in Hong Kong once did – it will only lead to tragedy…Taiwan can enjoy more autonomy by negotiating now rather than waiting another 10 years.”
  • Taiwan has economic and industrial strengths that China would like to maintain and benefit from after a hypothetical reunification [which to me, would seem to discourage any full-out military onslaught on a major urban and industrial city]. This is similar to the situation with Hong Kong, where there is some degree of autonomy and the situation is short of full integration [but in my words – obviously much more limited in terms of political freedom than it was in the past].
  • “How can they ever forget that it was Japan’s aggression which separated Taiwan from the mainland in the first place?” [Interestingly, Taiwanese I know tend to have relatively warm feelings towards Japan. I had to refresh on the history again thanks to Wikipedia – Taiwan was occupied/colonized/ruled by Japan from 1895 to 1945. So it was not invaded and dominated in the 1930s and 40s like much of the rest of China and Southeast Asia, and people there were not mistreated as badly.]
  • On “rare earths” we may hear about the US and its allies developing other sources of rare earths, but there are certain “heavy rare earths” which only China produces, and which are critical to industries around the world. Yeo says China could have played this card at any time in the past, and did so only reluctantly as a bargaining chip in response to the recent round of trade disruptions initiated by the Orange Baboon-Ass God [my words, although he does go into a tangent about the Monkey King which is a Chinese/Buddhist legendary epic. Maybe this is actually a very subtle swipe at his dipshit highness.] Yeo sees this situation as a form of mutually assured destruction where it would be irrational for either side to escalate further.
  • The reality of the US government debt is that if there is a severe contraction or reduction in the growth rate, it would at some point have to print money to service its debt. Central banks around the world are buying gold and diversifying away from the US dollar because of this risk.
  • “He [His Orange-Ass Highness] recognises that the US cannot dominate the world the way it used to in the past. The US hasn’t got the financial power or the manufacturing capability. So it has to retreat some and consolidate around its own core and concentrate on healing itself.” The US knows it is overextended globally, and this is what the bluster over exerting itself in the Western Hemisphere is about. It won’t be able to continue exerting itself globally by sheer power and force, so it is retreating particularly from Asia while still trying to look tough. [Maybe, but aren’t there still the 800+ military bases around the world? And why would we antagonize allies if we are in a position of weakness? I am just saying this is irrational, but I admit that ideology can Trump rationality.]
  • He doesn’t see disputes between China and Vietnam or China and the Philippines in the South China Sea “boiling over”.

ports, shipping lanes, and grand geopolitical strategy?

This article says Panama, Greenland, South Africa, and even Somalia are all important to sea-based trade and naval control of sea lanes in the event of war. I don’t doubt this, but this also feels like a grand strategy cooked up by somebody’s armchair general uncle just reading stuff on the internet and looking at Google Maps. I also found this interesting:

While the United States dominates global maritime security, there is a huge disparity in the other direction when it comes to influence over maritime trade. Unlike the PRC, which controls around 12.6 percent of global port throughput through COSCO and CMP, the United States has no state-backed firms among the world’s leading terminal operators. In terms of global port influence, the United States would likely rank behind not only the PRC but also the United Arab Emirates (DP World), France (CMA CGM/Terminal Link), and Singapore (PSA International).

U.S. ports and port operations seem to be way behind the leading edge elsewhere in the world. So one thing we could do is focus on learning how to build and operate modern, highly automated, large-scale ports. This would sound like part of a sound “industrial strategy” to me. And it makes sense that we wouldn’t want China or any other country controlling trade and sea lanes to the detriment of free trade. We shouldn’t be trying to do this either. It would make sense to me to focus on international agreements to keep access to ports and shipping lanes open and fair to all countries.

is the Chinese government suppression of Uyghurs real?

Max Blumenthal says the Uyghur suppression is based on a very small number of unreliable sources. Well, I first read about it in Der Spiegel, I think, and it has also been covered by the Guardian. My understanding is that it is a somewhat sinister use of technology to track large numbers of people, identify and preempt potential Islamic extremism. The Chinese government officials probably think it is justified to head off the potential for violence, and yet it probably meets the UN definition of cultural genocide. So I don’t have a verdict here, but I certainly don’t think it is made up. I do suspect we will see heavy surveillance and tracking regimes like this popping up elsewhere in the future, such as Gaza for instance.

China 10-15 years head of U.S. in ability to deploy nuclear power, and gearing up for fusion

This article from “Information Technology and Innovation Foundation”, which I have never heard of but does not raise my government propaganda hackles, says China is “China likely stands 10 to 15 years ahead of the United States in its ability to deploy fourth-generation nuclear reactors at scale”. Also, “China’s innovation strengths in nuclear power pertain especially to organizational, systemic, and incremental innovation.” So, we can still invent technology here in the USA but we can’t follow through to execute and construct it at scale. Sounds about right. Plus, we have a strong headwind of fossil fuel company propaganda to overcome, which the nuclear and regulated electric utility industries do not seem able to match.

Nuclear power has to be a big part of the climate solution. It just has to, and we should have started the pipeline decades ago, but there is no time like the present and China has the right idea. There is no reason this should be threatening to the U.S. either, other than our companies’ inability to compete. We should partner with them and get this technology built for the good of the world, which is also our own good. Or if companies based in China are too much of a political hot potato, partner with Japanese and Korean companies that know how to get things built.

America’s “ambiguous” Taiwan policy

This article explains the U.S. policy of being intentionally vague about defending Taiwan. It is all about maximizing deterrence. Historically, the idea was both to deter China from any attack, but also to deter Taiwan from a declaration of independence that would be likely to provoke an attack. Going forward, this article suggests arming Taiwan to the teeth and encircling China by stationing U.S. forces in Japan, the Philippines and Australia.

I don’t know – not being a foreign policy expert but not wanting war or especially nuclear war, I might focus on convincing China that the U.S. is not a threat to them as long as they do not threaten Taiwan. And keep reducing our nuclear stockpile so they don’t feel like they have to keep growing theirs, and consider a no first strike policy.

Formalizing the U.S. alliance with other countries in the region sounds a bit NATO-like, and look how well that has been working for Europe.