https://www.taipeitimes.com/News/editorials/archives/2023/02/17/2003794503
"True hegemons prevail not by force, but by offering hard-to-resist Faustian bargains. A prime example is the “dark deal,” which underpinned China’s economic miracle prior to the new cold war with the US. That arrangement hangs by a thread.

“Our dark deal,” a Chinese official once explained to me, “turns on the US trade deficit, which keeps demand for our manufactures high. In return, our capitalists invest the bulk of their dollar superprofits into America’s FIRE [finance, insurance and real estate]. Once this process got underway, America shifted much of its industrial production to our shores.”

For about half a century, the dark deal allowed China to convert its excess production — or net exports — into rights over property and rents in the US. It ensured that the US dollar’s supremacy was just as functional to the interests of US rentiers as it was to Chinese capitalists.

The longevity of the US’ global supremacy is, therefore, intertwined with China’s dilemma and with the US’ toxic domestic politics, which reflect the hollowing out of its working and middle classes. Without the US dollar’s global reign, the US’ deindustrialization would not have accelerated, and Chinese capitalists would not have extracted colossal surplus value from Chinese workers to stash in the US’ rentier sector.

Whatever the US’ rationale for targeting China, the cold war that the US launched under former US president Donald Trump and escalated under US President Joe Biden has placed enormous pressure on US conglomerates and the Chinese Communist Party to think beyond the dark deal which had hitherto been central to their respective interests.

However, conglomerates such as Apple Inc can do very little to decouple from China without being ruined in the process, so China has a risky, but real alternative: deploy its homegrown fintech industry to insulate itself from the US’ hostile measures.

Imagine bundling Google, Facebook, Twitter, Instagram and YouTube in a single application. Then, roll onto the same platform Skype, WhatsApp, Viber and Snapchat, add e-commerce platforms such as Amazon, Spotify, Netflix, Disney+, Airbnb, Uber and Orbitz, and throw in PayPal, Charles Schwab and every Wall Street bank’s app.

Stop imagining: This is what WeChat, Tencent’s mobile messaging app, already offers its users, who exchange more than 40 billion messages daily.

While streaming music or television shows, WeChat users do not need to exit the app to send money to anyone within China — or to millions of people outside of China who have downloaded WeChat and opened a yuan account with a Chinese bank.

This amalgamation of China’s big tech and finance — cloud finance — is a potential game changer. Compare a tonne of aluminum shipped from Shanghai to Los Angeles with targeted advertisements peddled to Americans via TikTok: Both yield dollars for a Chinese company.

However, whereas the dollars from aluminum depend on a Chinese-produced lump of metal physically migrating to the US on the coattails of the US trade deficit, the US dollars earned by TikTok in the US do not.

As Chinese cloud finance grows, China’s rich and powerful find themselves less subject to the US trade deficit nor to US policymakers’ power to regulate Chinese goods passing through their ports.

As the US’ new cold war threatens to squeeze Chinese conventional capitalism, China could end the dark deal that keeps it tied to US hegemony by mobilizing its homegrown cloud finance and pursuing a growth model that no longer relies on the US trade deficit.

Were China to take this option, the domestic and global impact would be monumental.

Domestically, the shift away from export-oriented physical manufactures would cause aggregate fixed capital investment to fall from about 50 percent of China’s national income to no more than 30 percent, with domestic consumption taking up the slack.

Globally, China’s decoupling from the US trade deficit would permit its cloud finance, ably assisted by the People’s Bank of China’s digital currency, to offer the rest of the world a yuan-denominated, cloud-based payment system that bypasses the dominant US dollar-denominated and US-policed payment system.

In the aftermath of the US and European authorities’ seizure of the Russian central bank’s reserves in response to the Russian invasion of Ukraine, demand for this Chinese payment system, and China’s cloud finance more generally, is skyrocketing. Severing the link to the US trade deficit is no longer a hypothetical scenario.

However, do Chinese policymakers really want to pursue it?

If they do, they would be ditching the industrial model at the heart of China’s economic miracle, incurring the wrath of China’s traditional capitalists, who crave access to the US trade deficit and to US dollars.

If they do not, China’s economy would continue to rely on a deal that gets darker by the day, as the clouds of the new cold war gather.

Perhaps their hand would be forced if the Biden administration persists in its effort to block China’s continued advancement as a technologically cutting-edge society.

How and when the dark deal gives way to an all-in bet on China’s cloud finance would decide the future of US-China relations — and perhaps the future of the world.

Yanis Varoufakis, a former Greek minister of finance, is the leader of the European Realistic Disobedience Front and a professor of economics at the University of Athens. "

Yanis Varoufakis is correct that China, likes other nations, relies on the dollar to rapidly grow its economy. But the so called dark deal does not make much sense.

Organizations hold dollar for different reasons. Central banks all over the world accumulate the dollar for trade as well as a reserve. Turning highest possible profit is usually not the main goal. In contrast, Private enterprises, however, mostly need to compete for survival. Turning profits and reinvest the profits to grow the enterprises are often the way to go.

When the dollar pile become bigger and bigger, Chinese capitalists inevitably invest their dollar in FIRE directly or indirectly via acquiring US stocks for higher returns.

On Friday, February 17, 2023 at 2:47:58 AM UTC, ltlee1 wrote:
> https://www.taipeitimes.com/News/editorials/archives/2023/02/17/2003794503
> "True hegemons prevail not by force, but by offering hard-to-resist Faustian bargains. A prime example is the “dark deal,” which underpinned China’s economic miracle prior to the new cold war with the US. That arrangement hangs by a thread.
>
> “Our dark deal,” a Chinese official once explained to me, “turns on the US trade deficit, which keeps demand for our manufactures high. In return, our capitalists invest the bulk of their dollar superprofits into America’s FIRE [finance, insurance and real estate]. Once this process got underway, America shifted much of its industrial production to our shores.”
>
> For about half a century, the dark deal allowed China to convert its excess production — or net exports — into rights over property and rents in the US. It ensured that the US dollar’s supremacy was just as functional to the interests of US rentiers as it was to Chinese capitalists.
>
> The longevity of the US’ global supremacy is, therefore, intertwined with China’s dilemma and with the US’ toxic domestic politics, which reflect the hollowing out of its working and middle classes. Without the US dollar’s global reign, the US’ deindustrialization would not have accelerated, and Chinese capitalists would not have extracted colossal surplus value from Chinese workers to stash in the US’ rentier sector.
>
> Whatever the US’ rationale for targeting China, the cold war that the US launched under former US president Donald Trump and escalated under US President Joe Biden has placed enormous pressure on US conglomerates and the Chinese Communist Party to think beyond the dark deal which had hitherto been central to their respective interests.
>
> However, conglomerates such as Apple Inc can do very little to decouple from China without being ruined in the process, so China has a risky, but real alternative: deploy its homegrown fintech industry to insulate itself from the US’ hostile measures.
>
> Imagine bundling Google, Facebook, Twitter, Instagram and YouTube in a single application. Then, roll onto the same platform Skype, WhatsApp, Viber and Snapchat, add e-commerce platforms such as Amazon, Spotify, Netflix, Disney+, Airbnb, Uber and Orbitz, and throw in PayPal, Charles Schwab and every Wall Street bank’s app.
>
> Stop imagining: This is what WeChat, Tencent’s mobile messaging app, already offers its users, who exchange more than 40 billion messages daily.
>
> While streaming music or television shows, WeChat users do not need to exit the app to send money to anyone within China — or to millions of people outside of China who have downloaded WeChat and opened a yuan account with a Chinese bank.
>
> This amalgamation of China’s big tech and finance — cloud finance — is a potential game changer. Compare a tonne of aluminum shipped from Shanghai to Los Angeles with targeted advertisements peddled to Americans via TikTok: Both yield dollars for a Chinese company.
>
> However, whereas the dollars from aluminum depend on a Chinese-produced lump of metal physically migrating to the US on the coattails of the US trade deficit, the US dollars earned by TikTok in the US do not.
>
> As Chinese cloud finance grows, China’s rich and powerful find themselves less subject to the US trade deficit nor to US policymakers’ power to regulate Chinese goods passing through their ports.
>
> As the US’ new cold war threatens to squeeze Chinese conventional capitalism, China could end the dark deal that keeps it tied to US hegemony by mobilizing its homegrown cloud finance and pursuing a growth model that no longer relies on the US trade deficit.
>
> Were China to take this option, the domestic and global impact would be monumental.
>
> Domestically, the shift away from export-oriented physical manufactures would cause aggregate fixed capital investment to fall from about 50 percent of China’s national income to no more than 30 percent, with domestic consumption taking up the slack.
>
> Globally, China’s decoupling from the US trade deficit would permit its cloud finance, ably assisted by the People’s Bank of China’s digital currency, to offer the rest of the world a yuan-denominated, cloud-based payment system that bypasses the dominant US dollar-denominated and US-policed payment system.
>
> In the aftermath of the US and European authorities’ seizure of the Russian central bank’s reserves in response to the Russian invasion of Ukraine, demand for this Chinese payment system, and China’s cloud finance more generally, is skyrocketing. Severing the link to the US trade deficit is no longer a hypothetical scenario.
>
> However, do Chinese policymakers really want to pursue it?
>
> If they do, they would be ditching the industrial model at the heart of China’s economic miracle, incurring the wrath of China’s traditional capitalists, who crave access to the US trade deficit and to US dollars.
>
> If they do not, China’s economy would continue to rely on a deal that gets darker by the day, as the clouds of the new cold war gather.
>
> Perhaps their hand would be forced if the Biden administration persists in its effort to block China’s continued advancement as a technologically cutting-edge society.
>
> How and when the dark deal gives way to an all-in bet on China’s cloud finance would decide the future of US-China relations — and perhaps the future of the world.
>
> Yanis Varoufakis, a former Greek minister of finance, is the leader of the European Realistic Disobedience Front and a professor of economics at the University of Athens. "
>
> Yanis Varoufakis is correct that China, likes other nations, relies on the dollar to rapidly grow its economy. But the so called dark deal does not make much sense.
>
> Organizations hold dollar for different reasons. Central banks all over the world accumulate the dollar for trade as well as a reserve. Turning highest possible profit is usually not the main goal. In contrast, Private enterprises, however, mostly need to compete for survival. Turning profits and reinvest the profits to grow the enterprises are often the way to go.
>
> When the dollar pile become bigger and bigger, Chinese capitalists inevitably invest their dollar in FIRE directly or indirectly via acquiring US stocks for higher returns.

Actually, the whole world has been benefited by readily available dollar.

First of all, dollar means liquidity.
Since nominal GDP = velocity of money X money stock, all other things
being equal, more dollar means faster nominal GDP growth for the world.
Secondly, more dollar to more countries means larger dollar zone means
more countries can readily trade with the US.

A win-win deal as long as the US could provide the world with dollars as a
creditor nation. The deal, however turned DARK for the US when it turned
itself into a debtor nation. The world is more likely to grow at the expanse
of the US.

On Friday, February 17, 2023 at 10:47:58 AM UTC+8, ltlee1 wrote:
> https://www.taipeitimes.com/News/editorials/archives/2023/02/17/2003794503
> "True hegemons prevail not by force, but by offering hard-to-resist Faustian bargains. A prime example is the “dark deal,” which underpinned China’s economic miracle prior to the new cold war with the US. That arrangement hangs by a thread.
>
> “Our dark deal,” a Chinese official once explained to me, “turns on the US trade deficit, which keeps demand for our manufactures high. In return, our capitalists invest the bulk of their dollar superprofits into America’s FIRE [finance, insurance and real estate]. Once this process got underway, America shifted much of its industrial production to our shores.”
>
> For about half a century, the dark deal allowed China to convert its excess production — or net exports — into rights over property and rents in the US. It ensured that the US dollar’s supremacy was just as functional to the interests of US rentiers as it was to Chinese capitalists.
>
> The longevity of the US’ global supremacy is, therefore, intertwined with China’s dilemma and with the US’ toxic domestic politics, which reflect the hollowing out of its working and middle classes. Without the US dollar’s global reign, the US’ deindustrialization would not have accelerated, and Chinese capitalists would not have extracted colossal surplus value from Chinese workers to stash in the US’ rentier sector.
>
> Whatever the US’ rationale for targeting China, the cold war that the US launched under former US president Donald Trump and escalated under US President Joe Biden has placed enormous pressure on US conglomerates and the Chinese Communist Party to think beyond the dark deal which had hitherto been central to their respective interests.
>
> However, conglomerates such as Apple Inc can do very little to decouple from China without being ruined in the process, so China has a risky, but real alternative: deploy its homegrown fintech industry to insulate itself from the US’ hostile measures.
>
> Imagine bundling Google, Facebook, Twitter, Instagram and YouTube in a single application. Then, roll onto the same platform Skype, WhatsApp, Viber and Snapchat, add e-commerce platforms such as Amazon, Spotify, Netflix, Disney+, Airbnb, Uber and Orbitz, and throw in PayPal, Charles Schwab and every Wall Street bank’s app.
>
> Stop imagining: This is what WeChat, Tencent’s mobile messaging app, already offers its users, who exchange more than 40 billion messages daily.
>
> While streaming music or television shows, WeChat users do not need to exit the app to send money to anyone within China — or to millions of people outside of China who have downloaded WeChat and opened a yuan account with a Chinese bank.
>
> This amalgamation of China’s big tech and finance — cloud finance — is a potential game changer. Compare a tonne of aluminum shipped from Shanghai to Los Angeles with targeted advertisements peddled to Americans via TikTok: Both yield dollars for a Chinese company.
>
> However, whereas the dollars from aluminum depend on a Chinese-produced lump of metal physically migrating to the US on the coattails of the US trade deficit, the US dollars earned by TikTok in the US do not.
>
> As Chinese cloud finance grows, China’s rich and powerful find themselves less subject to the US trade deficit nor to US policymakers’ power to regulate Chinese goods passing through their ports.
>
> As the US’ new cold war threatens to squeeze Chinese conventional capitalism, China could end the dark deal that keeps it tied to US hegemony by mobilizing its homegrown cloud finance and pursuing a growth model that no longer relies on the US trade deficit.
>
> Were China to take this option, the domestic and global impact would be monumental.
>
> Domestically, the shift away from export-oriented physical manufactures would cause aggregate fixed capital investment to fall from about 50 percent of China’s national income to no more than 30 percent, with domestic consumption taking up the slack.
>
> Globally, China’s decoupling from the US trade deficit would permit its cloud finance, ably assisted by the People’s Bank of China’s digital currency, to offer the rest of the world a yuan-denominated, cloud-based payment system that bypasses the dominant US dollar-denominated and US-policed payment system.
>
> In the aftermath of the US and European authorities’ seizure of the Russian central bank’s reserves in response to the Russian invasion of Ukraine, demand for this Chinese payment system, and China’s cloud finance more generally, is skyrocketing. Severing the link to the US trade deficit is no longer a hypothetical scenario.
>
> However, do Chinese policymakers really want to pursue it?
>
> If they do, they would be ditching the industrial model at the heart of China’s economic miracle, incurring the wrath of China’s traditional capitalists, who crave access to the US trade deficit and to US dollars.
>
> If they do not, China’s economy would continue to rely on a deal that gets darker by the day, as the clouds of the new cold war gather.
>
> Perhaps their hand would be forced if the Biden administration persists in its effort to block China’s continued advancement as a technologically cutting-edge society.
>
> How and when the dark deal gives way to an all-in bet on China’s cloud finance would decide the future of US-China relations — and perhaps the future of the world.
>
> Yanis Varoufakis, a former Greek minister of finance, is the leader of the European Realistic Disobedience Front and a professor of economics at the University of Athens. "
>
> Yanis Varoufakis is correct that China, likes other nations, relies on the dollar to rapidly grow its economy. But the so called dark deal does not make much sense.
>
> Organizations hold dollar for different reasons. Central banks all over the world accumulate the dollar for trade as well as a reserve. Turning highest possible profit is usually not the main goal. In contrast, Private enterprises, however, mostly need to compete for survival. Turning profits and reinvest the profits to grow the enterprises are often the way to go.
>
> When the dollar pile become bigger and bigger, Chinese capitalists inevitably invest their dollar in FIRE directly or indirectly via acquiring US stocks for higher returns.

Yes, China will dump the dark deal of using US deficit dollar as they have the means to reduce down when they complete its set up a transaction system with a number of BRIC countries that will use their gold reserves to validate their currency value when in transaction to each other. This is much strong than the fake US dollars to which tts reserves is actually US debts.

On Sunday, February 19, 2023 at 5:10:21 PM UTC, stoney wrote:
> On Friday, February 17, 2023 at 10:47:58 AM UTC+8, ltlee1 wrote:
> > https://www.taipeitimes.com/News/editorials/archives/2023/02/17/2003794503
> > "True hegemons prevail not by force, but by offering hard-to-resist Faustian bargains. A prime example is the “dark deal,” which underpinned China’s economic miracle prior to the new cold war with the US. That arrangement hangs by a thread.
> >
> > “Our dark deal,” a Chinese official once explained to me, “turns on the US trade deficit, which keeps demand for our manufactures high. In return, our capitalists invest the bulk of their dollar superprofits into America’s FIRE [finance, insurance and real estate].. Once this process got underway, America shifted much of its industrial production to our shores.”
> >
> > For about half a century, the dark deal allowed China to convert its excess production — or net exports — into rights over property and rents in the US. It ensured that the US dollar’s supremacy was just as functional to the interests of US rentiers as it was to Chinese capitalists.
> >
> > The longevity of the US’ global supremacy is, therefore, intertwined with China’s dilemma and with the US’ toxic domestic politics, which reflect the hollowing out of its working and middle classes.. Without the US dollar’s global reign, the US’ deindustrialization would not have accelerated, and Chinese capitalists would not have extracted colossal surplus value from Chinese workers to stash in the US’ rentier sector.
> >
> > Whatever the US’ rationale for targeting China, the cold war that the US launched under former US president Donald Trump and escalated under US President Joe Biden has placed enormous pressure on US conglomerates and the Chinese Communist Party to think beyond the dark deal which had hitherto been central to their respective interests.
> >
> > However, conglomerates such as Apple Inc can do very little to decouple from China without being ruined in the process, so China has a risky, but real alternative: deploy its homegrown fintech industry to insulate itself from the US’ hostile measures.
> >
> > Imagine bundling Google, Facebook, Twitter, Instagram and YouTube in a single application. Then, roll onto the same platform Skype, WhatsApp, Viber and Snapchat, add e-commerce platforms such as Amazon, Spotify, Netflix, Disney+, Airbnb, Uber and Orbitz, and throw in PayPal, Charles Schwab and every Wall Street bank’s app.
> >
> > Stop imagining: This is what WeChat, Tencent’s mobile messaging app, already offers its users, who exchange more than 40 billion messages daily.
> >
> > While streaming music or television shows, WeChat users do not need to exit the app to send money to anyone within China — or to millions of people outside of China who have downloaded WeChat and opened a yuan account with a Chinese bank.
> >
> > This amalgamation of China’s big tech and finance — cloud finance — is a potential game changer. Compare a tonne of aluminum shipped from Shanghai to Los Angeles with targeted advertisements peddled to Americans via TikTok: Both yield dollars for a Chinese company.
> >
> > However, whereas the dollars from aluminum depend on a Chinese-produced lump of metal physically migrating to the US on the coattails of the US trade deficit, the US dollars earned by TikTok in the US do not.
> >
> > As Chinese cloud finance grows, China’s rich and powerful find themselves less subject to the US trade deficit nor to US policymakers’ power to regulate Chinese goods passing through their ports.
> >
> > As the US’ new cold war threatens to squeeze Chinese conventional capitalism, China could end the dark deal that keeps it tied to US hegemony by mobilizing its homegrown cloud finance and pursuing a growth model that no longer relies on the US trade deficit.
> >
> > Were China to take this option, the domestic and global impact would be monumental.
> >
> > Domestically, the shift away from export-oriented physical manufactures would cause aggregate fixed capital investment to fall from about 50 percent of China’s national income to no more than 30 percent, with domestic consumption taking up the slack.
> >
> > Globally, China’s decoupling from the US trade deficit would permit its cloud finance, ably assisted by the People’s Bank of China’s digital currency, to offer the rest of the world a yuan-denominated, cloud-based payment system that bypasses the dominant US dollar-denominated and US-policed payment system.
> >
> > In the aftermath of the US and European authorities’ seizure of the Russian central bank’s reserves in response to the Russian invasion of Ukraine, demand for this Chinese payment system, and China’s cloud finance more generally, is skyrocketing. Severing the link to the US trade deficit is no longer a hypothetical scenario.
> >
> > However, do Chinese policymakers really want to pursue it?
> >
> > If they do, they would be ditching the industrial model at the heart of China’s economic miracle, incurring the wrath of China’s traditional capitalists, who crave access to the US trade deficit and to US dollars.
> >
> > If they do not, China’s economy would continue to rely on a deal that gets darker by the day, as the clouds of the new cold war gather.
> >
> > Perhaps their hand would be forced if the Biden administration persists in its effort to block China’s continued advancement as a technologically cutting-edge society.
> >
> > How and when the dark deal gives way to an all-in bet on China’s cloud finance would decide the future of US-China relations — and perhaps the future of the world.
> >
> > Yanis Varoufakis, a former Greek minister of finance, is the leader of the European Realistic Disobedience Front and a professor of economics at the University of Athens. "
> >
> > Yanis Varoufakis is correct that China, likes other nations, relies on the dollar to rapidly grow its economy. But the so called dark deal does not make much sense.
> >
> > Organizations hold dollar for different reasons. Central banks all over the world accumulate the dollar for trade as well as a reserve. Turning highest possible profit is usually not the main goal. In contrast, Private enterprises, however, mostly need to compete for survival. Turning profits and reinvest the profits to grow the enterprises are often the way to go.
> >
> > When the dollar pile become bigger and bigger, Chinese capitalists inevitably invest their dollar in FIRE directly or indirectly via acquiring US stocks for higher returns.
> Yes, China will dump the dark deal of using US deficit dollar as they have the means to reduce down when they complete its set up a transaction system with a number of BRIC countries that will use their gold reserves to validate their currency value when in transaction to each other. This is much strong than the fake US dollars to which tts reserves is actually US debts.

China's holding less dollar and less involved in the dollar zone will make the already DARK deal
DARKER for the US.

US debt at present is not any kind of exorbitant privilege but another way for the US frog to boil
itself slowly. Again, two guys running from a wolf. The wolf is the problem facing the country.
But the winner does not have to outrun the wolf by solving the problem. He only has to outrun
the other candidate.

On Friday, February 17, 2023 at 2:47:58 AM UTC, ltlee1 wrote:
> https://www.taipeitimes.com/News/editorials/archives/2023/02/17/2003794503
> "True hegemons prevail not by force, but by offering hard-to-resist Faustian bargains. A prime example is the “dark deal,” which underpinned China’s economic miracle prior to the new cold war with the US. That arrangement hangs by a thread.
>
> “Our dark deal,” a Chinese official once explained to me, “turns on the US trade deficit, which keeps demand for our manufactures high. In return, our capitalists invest the bulk of their dollar superprofits into America’s FIRE [finance, insurance and real estate]. Once this process got underway, America shifted much of its industrial production to our shores.”
>
> For about half a century, the dark deal allowed China to convert its excess production — or net exports — into rights over property and rents in the US. It ensured that the US dollar’s supremacy was just as functional to the interests of US rentiers as it was to Chinese capitalists.
>
> The longevity of the US’ global supremacy is, therefore, intertwined with China’s dilemma and with the US’ toxic domestic politics, which reflect the hollowing out of its working and middle classes. Without the US dollar’s global reign, the US’ deindustrialization would not have accelerated, and Chinese capitalists would not have extracted colossal surplus value from Chinese workers to stash in the US’ rentier sector.

Yanis Varoufakis is not well informed about China's economic development and the role of cheap labor. His view, like many Westerners, is at least 10 years outdated. The following from Zhang We-wei's 2013 book "China Horizon":

"Qualitatively, the Chinese economy has shifted from being merely labor intensive to a combination of labor-intensive
and technology-intensive plus capital intensive. The impression of products “made in China” as merely labor-intensive
of dubious quality is outdated. In the first half of 2012, mechanical and electrical products accounted for 3/5 of China’s
total exports.

The combined export volume of textiles, garments, bags and luggage, footwear, toys, furniture and plastics commodities
was just 1/5 of China’s total value of exports.
China is home to some of the world’s most sophisticated industrial capabilities, including super-critical thermal power
stations, nuclear power plants of the third and fourth generation ultra-high voltage electric grids, refineries of the highest
standards and the world’s finest coal-to-liquids plants. Furthermore, China has mastered the application of some of the
most advanced productive technologies critical to future industrial development, such as casting processes and modularized
manufacturing bases suitable for super-large parts. China is also the world’s leading producer of the largest and maximal
load-bearing digital machine tools, of land-based heavy machineries, as well as ship-building and offshore oil drilling
machineries. China’s 4G communication technology standards have been accepted internationally, and 5G research is well
on its way."

In short, Chinese capitalists nowadays rely more on technology than cheap labor.
>
> Whatever the US’ rationale for targeting China, the cold war that the US launched under former US president Donald Trump and escalated under US President Joe Biden has placed enormous pressure on US conglomerates and the Chinese Communist Party to think beyond the dark deal which had hitherto been central to their respective interests.
>
> However, conglomerates such as Apple Inc can do very little to decouple from China without being ruined in the process, so China has a risky, but real alternative: deploy its homegrown fintech industry to insulate itself from the US’ hostile measures.
>
> Imagine bundling Google, Facebook, Twitter, Instagram and YouTube in a single application. Then, roll onto the same platform Skype, WhatsApp, Viber and Snapchat, add e-commerce platforms such as Amazon, Spotify, Netflix, Disney+, Airbnb, Uber and Orbitz, and throw in PayPal, Charles Schwab and every Wall Street bank’s app.
>
> Stop imagining: This is what WeChat, Tencent’s mobile messaging app, already offers its users, who exchange more than 40 billion messages daily.
>
> While streaming music or television shows, WeChat users do not need to exit the app to send money to anyone within China — or to millions of people outside of China who have downloaded WeChat and opened a yuan account with a Chinese bank.
>
> This amalgamation of China’s big tech and finance — cloud finance — is a potential game changer. Compare a tonne of aluminum shipped from Shanghai to Los Angeles with targeted advertisements peddled to Americans via TikTok: Both yield dollars for a Chinese company.
>
> However, whereas the dollars from aluminum depend on a Chinese-produced lump of metal physically migrating to the US on the coattails of the US trade deficit, the US dollars earned by TikTok in the US do not.
>
> As Chinese cloud finance grows, China’s rich and powerful find themselves less subject to the US trade deficit nor to US policymakers’ power to regulate Chinese goods passing through their ports.
>
> As the US’ new cold war threatens to squeeze Chinese conventional capitalism, China could end the dark deal that keeps it tied to US hegemony by mobilizing its homegrown cloud finance and pursuing a growth model that no longer relies on the US trade deficit.
>
> Were China to take this option, the domestic and global impact would be monumental.
>
> Domestically, the shift away from export-oriented physical manufactures would cause aggregate fixed capital investment to fall from about 50 percent of China’s national income to no more than 30 percent, with domestic consumption taking up the slack.
>
> Globally, China’s decoupling from the US trade deficit would permit its cloud finance, ably assisted by the People’s Bank of China’s digital currency, to offer the rest of the world a yuan-denominated, cloud-based payment system that bypasses the dominant US dollar-denominated and US-policed payment system.
>
> In the aftermath of the US and European authorities’ seizure of the Russian central bank’s reserves in response to the Russian invasion of Ukraine, demand for this Chinese payment system, and China’s cloud finance more generally, is skyrocketing. Severing the link to the US trade deficit is no longer a hypothetical scenario.
>
> However, do Chinese policymakers really want to pursue it?
>
> If they do, they would be ditching the industrial model at the heart of China’s economic miracle, incurring the wrath of China’s traditional capitalists, who crave access to the US trade deficit and to US dollars.
>
> If they do not, China’s economy would continue to rely on a deal that gets darker by the day, as the clouds of the new cold war gather.
>
> Perhaps their hand would be forced if the Biden administration persists in its effort to block China’s continued advancement as a technologically cutting-edge society.
>
> How and when the dark deal gives way to an all-in bet on China’s cloud finance would decide the future of US-China relations — and perhaps the future of the world.
>
> Yanis Varoufakis, a former Greek minister of finance, is the leader of the European Realistic Disobedience Front and a professor of economics at the University of Athens. "
>
> Yanis Varoufakis is correct that China, likes other nations, relies on the dollar to rapidly grow its economy. But the so called dark deal does not make much sense.
>
> Organizations hold dollar for different reasons. Central banks all over the world accumulate the dollar for trade as well as a reserve. Turning highest possible profit is usually not the main goal. In contrast, Private enterprises, however, mostly need to compete for survival. Turning profits and reinvest the profits to grow the enterprises are often the way to go.
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> When the dollar pile become bigger and bigger, Chinese capitalists inevitably invest their dollar in FIRE directly or indirectly via acquiring US stocks for higher returns.