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China Morning Missive.

This will be a quick one. Just wanted to post a Note to provide a perfect comparison of where fiscal spending is allocated in China versus the United States.

There’s been a plethora of commentary over the past several weeks regarding China building yet another massive dam. What will be the world’s largest hydropower facility. Three times the size of the Three Gorges Dam. The estimated cost for the mega-project is USD167bn. The final cost, once completed, will probably be closer to USD200bn based on overrun estimates for the Three Gorges construction.

The expected time to complete construction is 10 years.

Now let’s compare this to the American program for nextgen SSN(X) submarines. The Navy just announced higher cost estimates for a single unit, the USS District of Columbia, to USD16.1bn. The program is projected to build 12 nextgen subs for a grand total of USD192bn. Roughly the same total costs as the Chinese mega-dam. I need to add that none of these submarines are included in the current AUKUS program. These are all submarines slotted for the American Navy and will be purchased by the American government.

This is but a single example of what has transpired over the past two decades. China has invested in infrastructure writ large. American has “invested” in weapon systems. Both countries have debt loads which are unwieldly. One of these, however, is getting a return on that debt load.

This dynamic needs to change and needs to change sooner rather than later.

https://www.bloomberg.com/news/articles/2025-07-22/next-gen-us-missile-submarine-sees-a-1-7-billion-cost-hike

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Discussion

Machu Pikacchu 4mo ago

I asked others this, but curious on your take as well. Given how much electricity China is bringing online and how dominant they are in producing ASICs and how much control they have over block template creation via Antpool and their proxy pools do you think China will run parallel systems (gold and BTC) for settling international trade eventually? This chart that Marty shared seems to indicate a big move coming.

Peter Alexander 4mo ago

Let me just put it this way. In all things, China drives to build out peak optionality. There is never just one path taken, and definitely never a full commitment to any single path.

At all times, current dynamics are evaluated and then weighed against a series of possible future outcomes. The very same, at least in my opinion, holds when it comes to China’s thinking on Bitcoin.

I should add here that the primary, even overwhelming, focus remains on gold as a settlement layer – via the Shanghai International Gold Exchange – and trade on the margins conducted in the local currency, Renminbi.

What I see as being overlooked by most macro analysts is just how risk averse the Chinese leadership can be when it comes to having a direct effect on upending the American-led world order. There would most certainly be a recognition of the very real ramification of moving too aggressively to upend the dollar hegemonic role. America would lash out. Better, the thinking would be, is to just keep chipping away. Don’t forget, the Chinese benefit greatly from the current global trade system. It is all about contingency planning in the off-chance access to SWIFT is cut off.

On the topic of BTC, it would be foolish to believe that China hasn’t built a position, and a potentially sizable position. I’m quite confident they have even if just as a hedge. There are also more than likely a series of contingency plans in place if there was a global consensus shift towards BTC. Maybe to the point, Chinese leadership, as I see it, would still prefer altering the global trade system which has existed for the past 500 years rather than experiment with what is seen as a new technology.

Hope this helps. Send through any additional questions you might have.