Sidney Fong

This is what I am.

[Sidney Fong @hnfong]

@nnmm347817 @DavidLe76335983 another one! here you go mate.

https://t.co/ALqF7c42ZY

[Elia Stellaria 🪿🍌 🔜 OFFKAI @EliaStellaria]

I did a face reveal during my first ever IRL cosplay stream, I hope it's ok

[Sidney Fong @hnfong]

@DavidLe76335983 maybe same way China got the Nvidia GPUs..

[Arnaud Bertrand @RnaudBertrand]

I often like Ray Dalio's takes on China but he gets quite a lot demonstrably wrong in this FT article on the "tribute system."

China's ancient tribute system - called 朝贡 (cháogòng) in Chinese - is typically very misunderstood in the West: we typically think it involved tributary states paying some form of "tribute" to China in exchange for protection - the way medieval vassals would pay fealty to a lord in Europe.

In reality, it had little to do with that. In fact, it was almost the opposite: in the Chaogong system, it was actually China paying the "tributary states."

The system was basically a quid-pro-quo where China would get "得名" (dé míng, literally "getting name/prestige") while tributary states would get "得实" (dé shí, literally "getting substance/material benefit") in exchange. It was about China paying huge amounts of money and other material benefits for the recognition of its centrality.

That's what makes it so alien to the Western framework, where tributary states are paying UP to the center, and security is enforced through military presence. The Chaogong system was almost exactly the inverse on both counts: China was paying DOWN and regional order was maintained not through the military but through generosity.

The core guiding principle of the system was established by the Hongwu emperor, the founding emperor of the Ming dynasty (incidentally one of the most interesting emperors in Chinese history since he is the only founder of a major dynasty who started off in life as a wandering beggar).

The principle he set in place was 厚往薄来 (hòu wǎng bó lái) - literally "generous outflow, modest inflow": giving out much more than you take in. This wasn't a byproduct of the system - it WAS the system. The entire architecture of Chaogong was built on this principle of asymmetric generosity.

Very concretely the way it worked is that tributary states would pay largely symbolic tribute to China (like local specialties and curiosities, the system codified that tribute should be "easy to obtain and not costly", 必易得而不贵) and they would in exchange receive 3 layers of economic benefits:
1) Immediate payback in the form of money and expensive goods (silk, brocade, porcelain, tea, silver, etc.), which value was typically dozens of times the value of the tribute received by the emperor
2) The right to trade during their tribute visit: the envoys' entourage could trade with specially licensed Chinese merchants at the Huitongguan (the official guesthouse in the capital)
3) Most importantly, and that's where the real money was, they would be granted the right to trade at Chinese ports. Under the Ming maritime prohibition, tributary status was the only legal entry point into the Chinese economy

China being China, this gave rise to some pretty funny hustles. The deal was so good that people started inventing entirely fictitious countries just to get in on it. There are several documented cases of people fabricating countries and showing up as "envoys" at the imperial court just to claim the privileges (https://t.co/nlJB8yWblv).

Another funny one is that there are several cases of Fujian merchants who would sail to Southeast Asia, get themselves appointed as minor officials by local rulers, then sail right back to China as "foreign envoys" - carrying huge commercial cargoes. In 1438, three members of Java's tribute delegation turned out to be guys from Fujian (https://t.co/QBES0IVprC).

The scam got so widespread that the Ming had to invent a credential system (勘合, kānhé) specifically to verify that tribute envoys were who they claimed to be and that the countries they came from were real.

More seriously though, the Chaogong system also led to big domestic tensions in some of China's neighboring countries, notably Japan which was permitted only one tribute mission per decade. The stakes were so high that the 2 most powerful feudal clans at the time (the Ōuchi and the Hosokawa) fought a shadow war over who controlled the trade license.

This culminated in the Ningbo Incident of 1523 (https://t.co/TgKtlc7zlO): two Japanese delegations from both rival clans arrived at the port of Ningbo and got into a dispute over whose credentials were legitimate, which ended up in a pitched battle on Chinese soil. They ended up rampaging through the city, killing Ming military officers, and altogether terrorizing the local population - all over who got to trade with China.

The aftermath of the Ningbo Incident led to the total breakdown of Japan-China trade. If that sounds familiar, it should...

Which brings back to today and Ray Dalio's description of China's tribute system, as well as his claim that we're facing some sort of modern revival of it in Asia.

First of all, some parts of his article are correct: there is indeed a significant power shift happening in Asia, with countries hedging by building closer ties with Beijing, and the US progressively withdrawing and altogether losing ground.

He is also completely right that Chinese strategic culture genuinely differs from Western strategic culture: as he writes they indeed play Go (WeiQi) and not chess.

He is however wrong to describe the tribute system as one based on pressure and intimidation. As we've just seen, it was pretty much the opposite: the basic idea was to be so generous that everyone wants in (to the extent that countries would literally fight to be tributaries), not so threatening that nobody dares leave.

He also - weirdly - seems to conflate the tribute system with the Art of War, treating them as two faces of the same Chinese playbook, when they've got strictly nothing to do with each others. They're not even from the same school of thought: the Chaogong system is fundamentally Confucian (以德服人, "winning people through virtue") whereas Sun Tzu is from an entirely different Chinese intellectual tradition - the Strategist school (兵家) - which is about as far removed from Confucian thinking as Machiavelli is from the Bible.

Mashing them together reads like someone who has picked up a handful of Chinese cliché references and treats them as interchangeable ingredients in a single "Chinese strategic culture" soup.

All in all, he makes the error WAY too many Western commentators do with Chinese concepts: he uses them as exotic wrapping paper for a fundamentally Western analysis. Strip away the Chinese terminology and his argument is actually pure Western thinking: what he is claiming is that China, as a rising power, is using its growing economic and military weight to reshape the regional order, weaker states are bandwagoning, and the declining hegemon can't stop it.

He is essentially taking Graham Allison's "Thucydides Trap," awkwardly draping it in misunderstood Chinese concepts, and presenting it as if it were Chinese thinking.

That being said, he is ironically correct - I think - that there is some form of revival of a tribute-like system but not in the way he understands it: China will (and does) use trade - its "generosity" - as a gravitational force to pull countries into its orbit. Not by threatening to cut them off, but by making the relationship too valuable to walk away from. THAT is much closer to how the actual Chaogong system worked.

It doesn't mean that the system is purely benevolent. The flipside of generosity is the absence of it: in the original tribute system, you could be cut off the way Japan was after the Ningbo Incident in the 16th century. And it's also what's happening - to some extent - to Japan today: after PM Takaichi declared that Japan would go to war with China over Taiwan, China has systematically restricted trade with Japan. Same story with what happened, for instance, to Australia in 2020 over PM Morrison's declarations on Covid.

The pattern is the same: the reward for participation is trade, and the punishment for hostility is its withdrawal. Essentially in the tribute system there is no stick, just a carrot: the stick is taking the carrot away.

Which, incidentally, is why you can be extremely confident that China will go to enormous lengths to develop its internal market, and why the current situation where China runs huge trade surpluses is facing mounting pressure to change from within China itself. If countries don't feel they're benefiting enough from trade with China, the entire logic collapses. That's why developing domestic demand isn't some target China sets itself to assuage Western demands, as some claim: it's genuinely a strategic imperative.

It's also why it's ironic that the West is so keen on pushing China to boost domestic consumption: in effect, it means we're already in a de-facto Chaogong-like system and they're asking that the carrot be bigger.

-----

I also wrote a Substack version of this post, which you can find here: https://t.co/jBUIVbDT9C

[Sidney Fong @hnfong]

@GaryWang28384 @kyleichan Dario has no time to shitpost after his models get banned by Trump

[Guohao Li 🐫 @guohao_li]

just in case you don’t know, the company behind GLM 5.2 is publicly listed, and its stock has gone up 15× in the past six months

[Sidney Fong @hnfong]

@antirez I feel guilty having one sitting in my apartment not being used much...

[Sidney Fong @hnfong]

@EliaStellaria

[Sidney Fong @hnfong]

@arincallsout @RnaudBertrand oh oh another one! Here you go:

https://t.co/0J7gLZiszY

[Sidney Fong @hnfong]

@EliaStellaria also, FYI, the last thing I heard on the stream was "the kamioshi cult?" in a skeptical tone.

It's not a good idea to question or doubt the cult(s)!!

[Sidney Fong @hnfong]

honestly, the personalities at the helm of the leading AI companies are literally walking red flags...

and now the era of free money is almost over, they show their true colors

[Arnaud Bertrand @RnaudBertrand]

By the way, public service announcement: if you're one of the numerous people posting about Anthropic's dystopian ways and you're thinking about getting Claude to help you write that post... don't!

Another one of their terms is that you may not use Claude to do anything that "exposes [Anthropic to] reputational harms" 👇

And, if you do, under the - extremely unusual - clause 13 of their terms (https://t.co/z43rJNkvZu), you have PRE-AGREED, by using Anthropic (and accepted their terms), that the harm you've done is irreparable, that you won't oppose Anthropic injunction, and they don't need to prove actual damage.

They can simply go to a judge in a friendly jurisdiction (and of course, their terms precise that any dispute "will be resolved exclusively in the state or federal courts located in San Francisco, California") and:
a) file an injunction that shuts you down
b) make you pay for everything since under section 11 of their terms you agree to indemnify Anthropic for "any and all liabilities, claims, damages, expenses (including reasonable attorneys' fees and costs), and other losses arising out of or related to your breach or alleged breach of these Terms."

In other words, if you use Claude to help you talk shit about Anthropic publicly, their terms say you pay their lawyers to go after you and you've already pre-agreed you've lost the case.

Oh, and cherry on the cake: in the odd case the judge were like "are you crazy, this is insanely abusive, you Anthropic are the ones at fault here," according to their terms Anthropic's maximum liability is... $100.

[Sidney Fong @hnfong]

@EliaStellaria no tax evasion allowed

[Sidney Fong @hnfong]

@W_T_Han Fun fact: USA only existed after WWII. They had like only 49 states before that. NOT THE SAME THING OBVIOUSLY. /s

[Ed Zitron @edzitron]

Very important point: SoftBank was pledging *all* of its OpenAI stock (worth $60bn+ on paper) to get a $6 billion margin loan. Banks turned it down due to concerns about the value of OpenAI stock. Banks clearly do not think OpenAI is worth $852 billion.
https://t.co/B9ilbd043M

[Sidney Fong @hnfong]

@EliaStellaria trick question. all of them!

[Sidney Fong @hnfong]

@aqn_purple2 https://t.co/hhhCjkqLtH

[Sidney Fong @hnfong]

@EliaStellaria I can't believe as a literal unc my score is lower than yours... (guess I'm young at heart :D

[Eric Yeung 👍🚀🌕 @KingKong9888]

Lu Qiyuan: Can China Afford the Cost of Saving the Dollar?

The U.S. dollar is on shaky ground, yet much of the world is looking to China for a rescue, including Russian President Vladimir Putin, who has effectively appealed for Beijing’s support. But economist Lu Qiyuan cuts through the rhetoric with a stark warning: saving the dollar could cost China its next three decades of development.

Who wants China to prop up the dollar? Putin is one. European governments, long-standing trade partners, form another chorus. Wall Street’s financial elite are unsurprisingly vocal. Even within China, a cohort of senior officials and policy voices appears eager to provide a backstop. Conspicuously absent from the discussion is a single, critical question: At what cost?

This is not a routine creditor-debtor transaction. It would require China to sacrifice the independence of the renminbi to serve as a de facto stabilizer for the dollar, effectively keeping the Chinese currency in the dollar’s shadow while assuming a portion of its enormous debt burden.

1. Inflated Realities and a Black Hole of Debt

Many observers fail to grasp how far official U.S. inflation metrics have diverged from actual purchasing-power erosion. By real purchasing-power measures, American inflation figures would likely need to be at least doubled.

Compounding the issue is America’s mountain of Treasury debt accumulated over three decades. Interest payments mask, but do not resolve the underlying principal shortfall. Today’s debt pressures represent merely the first drops of a gathering storm; the full force of the eventual adjustment still lies ahead.

Rescuing the dollar would mean China absorbing a significant share of that shock. This is not emergency liquidity provision; it is volunteering to stand in the path of the lightning.

2. Historical Parallel: Crossing the Yangtze in 1949?

Lu Qiyuan draws a chilling historical analogy. In 1949, much of the international community, including residual Nationalist forces, the United States, and the Soviet Union, urged the People’s Liberation Army not to cross the Yangtze River. The argument was pragmatic: the costs of total victory were too high; better to accept a divided China as a buffer.

Yet Mao Zedong famously rejected such counsel with the words: “Pursue the remaining enemy with the courage that remains; do not imitate the King of Chu by seeking empty fame.”

Had China heeded those calls for restraint, would a unified modern China even exist today?

The parallel to the current moment is uncomfortably close. Once again, global voices urge China to keep the renminbi subordinated to the dollar; all under the banner of “preserving international financial stability.” In reality, this amounts to asking China to surrender monetary sovereignty to sustain a hegemonic system that has lost fiscal discipline.

3. Two Unacceptable Outcomes
Lu Qiyuan’s cost-benefit analysis is uncompromising. China faces two potential paths, neither tolerable:

⭕️Option One: Delay its emergence as a developed economy by a decade. This would mean slamming the brakes on the modernization of 1.4 billion people, pushing back rural revitalization, technological breakthroughs, and improvements in living standards.

⭕️ Option Two: Replicate Japan’s “lost thirty years.” After the 1985 Plaza Accord, Japan absorbed the cost of sustaining dollar stability, only to see its manufacturing prowess erode and its economy slide into a low-growth, low-desire trap. An entire generation’s prospects were sacrificed on the altar of financial accommodation.
Neither outcome is one China can afford.

[Sidney Fong @hnfong]

@EliaStellaria You're our favorite mess

[Sidney Fong @hnfong]

@TipcornK @negligible_cap they'd have to play the national security card for this one..