Saturday, September 23, 2023

"Russia's Dependence On China Is Deep And Wide — It May Also Be Irreversible"

From WorldCrunch, September 18:


Russian President Vladimir Putin has scored a "huge own goal" with the war in Ukraine, according to CIA Director William Burns.

He was referring to Russia's losses at the front, international sanctions, the expansion of NATO and Russia's growing dependence on China — something that has escalated in recent years and may well become one of the enduring challenges Putin's government has created for Russia.

The risks associated with this final point, the deepening dependence on China, are substantial — and breaking free from it will prove to be a formidable task.

Russia's evolving relationship with China has become a focal point in international geopolitics and economics. This transformation has been catalyzed by a combination of factors, including Western sanctions, Russia's annexation of Crimea in 2014, its full-scale invasion of Ukraine in 2022 and China's meteoric rise in the global economy since the early 2000s.

The shift in Russia's economic alignment toward China began in earnest in the aftermath of the Ukraine conflict and the resulting Western sanctions. Prior to this, Russia had maintained strong trade ties with Europe, particularly in energy exports. But as sanctions took hold, Russia turned to China as an alternative trading partner and a source of investment.

These hopes for increased commerce between the two countries come as Moscow seeks continued support for its war on Ukraine. China's top diplomat Wang Yi is currently visiting Russia for security talks, which Russian media say could pave the way for Vladimir Putin visiting Beijing soon.

Yet despite attempts to gain diplomatic punch from such a visit, Putin would arrive in the Chinese capital weaker and more beholden to China than ever.

Trade dependency
One of the most notable aspects of Russia's pivot to the East is its growing trade dependence on China. Chinese imports to Russia increased after 2008, culminating in China surpassing Germany as Russia's leading supplier of goods.

In 2006, China's share of Russian imports was a mere 9.4%, but by 2021, it had surged to a substantial 24.8%. Likewise, China's share of Russian exports nearly tripled during the same period, making China Russia's largest export destination by 2017.

Since the 2022 invasion, Russia has stopped publishing detailed customs statistics. Consequently, we must rely on various sources, including occasional reports from Russian officials, data from other countries and expert assessments. According to Iikki Korhonen, who leads the Institute for Transition Economies at the Bank of Finland, China's portion of Russian imports “likely exceeded one-third and may have reached as high as 40% by the end of 2022."

Russia is now, if not the most dependent country on China, then second only to North Korea.

The level of dependence in foreign trade that Russia currently exhibits is typically associated with colonial or former colonial relationships, as well as "center-periphery" systems. In these systems, the central entity's share of foreign trade with peripheral countries is akin to China's role in Russia's foreign economic activities.

Throughout recorded history, no partner of Russia — except for China post-2008 — has accounted for more than 16% of Russian imports. Similarly, in terms of Russian exports, no partner, except China since 2018, has surpassed a 15% share. "In terms of imports,” Iikki Korhonen argues, “Russia is now, if not the most dependent country on China, then second only to North Korea."

Worth noting, just as North Korean leader Kim Jong-un wraps up a rare six-day trip to Russia that underscored how Moscow and Pyongyang's interests, military and commercial in particular, are aligning

Hydrocarbons and goods dependence
Recognizing the risks associated with such concentration, countries are taking steps to mitigate it. Germany's recent "China Strategy" is a prime example, aimed at reducing foreign economic reliance on China.

This strategy underscores China's efforts to reduce its own dependence on other nations while simultaneously establishing dominance in global production chains. In contrast, Russia has taken a different path, with Europe successfully decreasing its reliance on Russian oil and gas in just a year.

But Russia now finds itself critically reliant on China — both as a purchaser of hydrocarbons and a supplier of goods, including its own products and transit items from other countries. For instance, the majority of semiconductors and microcircuits crucial for military production are sourced through China, subject to the strictest sanctions....


Diagram of the six possible types of symbiotic relationship, from mutual benefit to mutual harm.

 File:Symbiotic relationships diagram.svg


"The day that destroyed the working class and sowed the seeds of Trump"

Salena Zito seems to actually care about the working class. here she is with a 2017 story. From the New York Post, September 16/18 of that year:

CAMPBELL, Ohio — Forty years ago, on Sept. 19, thousands of men walked into the Campbell Works of Youngstown Sheet and Tube along the Mahoning River before the early shift.

Like every fall morning, they were armed with lunch pails and hard hats; the only worry on their minds was the upcoming Pittsburgh Steelers game on “Monday Night Football.” The only arguing you heard was whether quarterback Terry Bradshaw had fully recovered from the dramatic hit he took from a Cleveland Browns player the season before.

It was just before 7 a.m., and the fog that had settled over the river was beginning to lift. As the sun began to streak through the mist, the men made their way into the labyrinth of buildings where they worked.

In the next hour, their lives would change forever.

From then on, this date in 1977 would be known as Black Monday in the Steel Valley, which stretches from Mahoning and Trumbull counties in Ohio eastward toward Pittsburgh. It is the date when Youngstown Sheet and Tube abruptly furloughed 5,000 workers in one day.

The bleeding never stopped.

Within the next 18 months, US Steel announced that the nation’s largest steel producer was also shutting down 16 plants across the nation, including their Ohio Works in Youngstown, a move that eliminated an additional 4,000 workers here. That announcement came one day before Jones and Laughlin Steel Corp. said they were cutting thousands of jobs at their facilities in the Mahoning Valley, too.

Within a decade, 40,000 jobs were gone. Within that same decade, 50,000 people had left the region, and by the next decade, that number was up to 100,000. Today the 22 miles of booming steel mills and the support industries that once lined the Mahoning River have mostly disappeared — either blown up, dismantled or reclaimed by nature.

If a bomb had hit this region, the scar would be no less severe on its landscape.

“The domino effect of Black Monday went on forever,” said Gary Steinbeck of nearby Warren, Ohio. Steinbeck was working up the river that day from the rolling plant at H.K. Porter, which also later went out of business. “The word spread quickly. Back then there weren’t any cellphones or social media. Good news travels fast, bad news travels at the speed of light. We knew within the hour the guys down the river were hurting, we knew within a day families were hurting, we knew within a week the whole region was suffering,” he said.

“Those numbers only reflect the jobs that were lost in the plant; the ripple effect was equally devastating. Grocery stores, pizza shops, gas stations, restaurants, department stores, car dealerships, barber shops all saw their business plummet and they started closing,” said Steinbeck.

Steinbeck was only 25 on Black Monday — but he said he knew then that the blow to his hometown would not be felt the same way in Washington.

News reports from the days and weeks following Black Monday showed that the White House, larger business community and economic experts were detached from the potency of what was happening here. They thought the overall economic impact was exaggerated, that it would not be the calamity Steinbeck and everyone else in Youngstown knew it would be.

“No one never calculated the cultural tragedy as part of the equation either,” Steinbeck said. “They didn’t just dismantle the old mills, they dismantled the societal fabric of what made Youngstown Youngstown.”

The Manhattan radical
At first the Mahoning Valley did not give up hope, none of them did. In fact they did something remarkable: The entire community fought back by forming a local initiative that consisted of faith leaders, local politicians and even a couple of radical activists, most notably Staughton Lynd, a formidable figure in the ’60s social justice movement.

“The response in this community took the country and the community members themselves by surprise,” said Lynd from his basement in his Niles, Ohio, home in Trumbull County.

On the night of Black Monday, Lynd remembers an emergency meeting was called by the Central Labor Union and a plan was endorsed to send petitions to President Jimmy Carter encouraging him to stop steel imports and put an ease on regulations that were hurting the industry. At the time, newer plants in China and Japan, which had better technological capabilities, were outstripping American production....


Previously in our labor mini-series:
In Light Of The Auto Workers Strike: "The Next Economy The End of the Working Class"
"Powell’s Inflation Nightmare: Job Seekers, incl. the Employed, Suddenly Expect Massively Higher Wages in Job Offers"
I'm all for workers staying ahead of inflation (plus more) and I'm all for private sector unions—although like President Roosevelt* I think public sector unions should be outlawed—when you have a situation like the United Auto Workers demanding a reduction in the workweek from 40 to 32 hours and (Detroit News, August 3)...
TS Lombard: Resurging Inflation
....It was Samuel Gompers, labor leader extraordinaire, who rhetorically asked what labor wanted and answered "More"* but the math is the math and if the United Auto Workers get the 46% wage increase they are asking for it will raise prices.
*The full quote:
“We do want more, and when it becomes more we shall still want more. 
And we shall never cease to demand more until we have received the results of our labor.”

U.S. Federal Reserve Announces It Will Begin Laying People Off

From Reuters, Sept 22:

Fed is cutting staff after more than a decade of payroll growth

The U.S. Federal Reserve system is cutting about 300 people from its payroll this year, a small but rare reduction in headcount across an organization that has grown steadily since 2010 as its reach in the economy and regulatory agenda have expanded.

A Fed spokesperson said the cuts are focused on the staff of the U.S. central bank's 12 regional reserve banks and mainly hit information technology jobs, including some no longer needed because of the spread of cloud-based computer software, and positions connected to the Fed's various systems for processing payments, which are being consolidated.

The spokesperson, who would not speak for direct attribution, said the staff cuts represented a combination of attrition, including retirements, and layoffs.

According to annual reports and financial documents prepared by the Fed each year, the number of staff budgeted for the system, including its regional banks, the Washington-based Board of Governors, and three smaller units, is due to fall by more than 500 positions from 2022 to 2023, from 24,428 to 23,895....


Things I Cannot Do: Art Edition

I always thought the sculptors who could  make a veil out of marble had a talent: