CHINAMacroReporter

April 18, 2020
The Pandemic's Impact on Trade
‘There are some people who would say that there was already a retreat from globalization underway.’ ‘The tools of globalization - enormous reductions in the cost of transportation and communication - remain.’ ‘But the marginal utility actually of further advances is declining – that would be one way to put it.’
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April 11, 2020
The Pandemic May Increase China's Economic Strength vis-à-vis the U.S.
‘Well, I think people around the world are rightly suspicious of the Chinese as they are probably equally suspicious of the Americans.'
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April 30, 2018
'Big lessons from the faulty analysis that spiked the Shanghai stock market'
ProTips from Andrew Polk, Trivium China On April 24, equity analysts interpreted a phrase used in a Politburo meeting readout to signal a new round of economic stimulus. And, the Shanghai stock market, one of the world's worst performers, spiked 2%. On April 25, having much earlier advised and protected clients, Andrew Polk of Trivium China published an analysis in Trivium's daily (and free) Later, Andrew and I talked about how he reached his conclusions. His explanation is a masterclass in how experience, discipline, and some tedious slogging, combined with a sound analytical framework, lead to good China analysis.
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April 18, 2018
New super-agency, National Supervision Commission—and China's massive government restructuring
'With government restructuring, the biggest thing is the creation of an entirely new branch of government: the National Supervisory Commission. Its entire job is to overlook every single public official in China. It is an institutionalization and deepening of the corruption crackdown that we've seen over the past few years.'In all, Andrew highlighted four major actions from the Two Sessions: 1.Chinese government restructuring 2.The policy roadmap 3.Personnel 4.The legislative agenda + the constitutional amendments
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April 16, 2018
The Chinese Government’s 9 Economic Policy Priorities in 2018 (and beyond)
[China Econ Observer] 1.Supply-side Structural Reform 2.Innovation 3.The “three critical battles” 4.Deepening reforms 5.Rural revitalization 6.The regional development strategy 7.Increasing consumption and improving investment 8.Opening up 9.People’s wellbeing
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April 10, 2018
U.S.-China trade dispute: Will China Weaponize the RMB and U.S. Treasury bonds?
U.S.-China trade war: collateral damageConsider the soy bean. 'China is threatened retaliatory tariffs on U.S. soybeans. The U.S. is one of the largest producers of soybeans. If China's not going to buy them, we're going to have an excess capacity.'' So, last week, we saw a soybean selloff.''But there was a complete dislocation in whole soybean supply chains. Downstream products, like soybean oil, didn't move at all in the same way.'
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April 5, 2018
Behind the U.S.-China trade dispute: 'The West's China gamble has failed.'
What's the root cause of the current friction between the U.S. and China? The West's disappointment that China did follow the western model but its own, argues Ed Tse, CEO of Gao Feng Advisory Company (a member of the China Analyst Network). [Ed's solution] look to the similarities between China and the West, especially in the tech sector, and be alert to China's evolution toward better IPR, market access, and other contentious issues, not just the remaining shortcomings. Below is a video of my discussion with Ed and excerpts from both the interview and his South China Morning Post op-ed, 'Chinese innovation with US characteristics? Maybe China and the West aren’t that far apart, in business at least.' Ed presents insights that differ greatly from the China Echo Chamber in the U.S. Let me know what you think.
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March 8, 2018
How Trump's tariffs impact China's trade/currency relations with Japan & Korea
[China markets update with TRACK's Bob Savage] 'The currency markets are embroiled in trying to figure out whether the Trump tariffs on steel and aluminum are good or bad for the U.S. economy and the U.S. stock market.'
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March 6, 2018
'E-commerce' is rapidly evolving into 'New Retail.' Jack Ma, Alibaba
Ed Tse, founder of the Gao Feng consultancy and the leading expert on Chinese innovation, introduced me to New Retail in a recent conversation. You will find his explanation of New Retail below, along with a couple of videos showing New Retail in action - as amazing today as Minority Report seemed years ago. Perhaps even more amazing is the China business strategy, the 'Third Way,' that made things like New Retail possible. Ed explains the Third Way in Part Two of our discussion that I will be posting soon. Chinese do do things their own way, as the Third Way again demonstrates. For now, have a look at the future today. And, stay tuned for Part Two for Ed's explanation of the Third Way that made New Retail possible.
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March 1, 2018
'Trump's tariffs just first shot—the big China action is Section 301'
Leland points out that President Trump's really big trade move against China yet to come, that is, Section 301 penalties. If you aren't up to speed on 301, you will be after you read and watch Leland's comments. As Leland says, with Section 301, 'regardless of how Section 232 steel and aluminum tariffs end up in the next few days - you're seeing the beginning, not the end, of Trump's aggressiveness on trade.' 'And, I don't think people have prepared themselves yet for the fact that 301 is coming.'
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February 22, 2018
A world of debt mortgages our economic future
Irresponsible borrowing by the US, China and India imperils global growth: What is not natural is China’s bad track record on debt: according to the Bank of International Settlements, every measure of debt — consumer, government and corporate — has risen as a share of GDP for the past decade. China went from a low-leverage country in 2007 to having a worse debt position than the US in 2017, despite the fact that the US itself has borrowed heavily.
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February 16, 2018
China's Crisis of Success
Here are five key points, each corresponding to a section below. "The Rise of China: How Economic Reform Is Creating a New Superpower" by Bill Overholt, published in 1993, was called 'nonsense' and 'too optimistic.' How did that work out for the reviewers? Now, almost three decades after "The Rise of China", Bill believes that China's future has become 'much more uncertain.'
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February 12, 2018
2017 China Property Report
One of the highlights in our recent 'In Pursuit of Patterns' series of client notes, showed that the land sales growth had tended to lead the price growth and a significant increase in land sales would lead, with a lag, to the subsequent correction in prices.
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February 9, 2018
The extraordinary power of China's corporate 'mega ecosystems'
Besides Alibaba and Tencent, companies like Ping An Insurance Group, Baidu and JD.com are building out mega ecosystems with incredible speed and intensity. Even some traditional manufacturers are moving in this direction. Zhejiang Geely Holding Group has gone from producing entry-level cars to selling premium models with the help of foreign acquisitions and has been the first Chinese carmaker to move into on-demand mobility services. It has also been experimenting with connected intelligent vehicles, shared ownership programs and flying cars, together assembling a sprawling transportation services ecosystem.
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February 8, 2018
China's trade surplus up, RMB weaker
[China markets update with TRACK's Bob Savage ] 'The RMB did not like the trade data at all, and it weakened immediately - over 1% today.' 'Overnight, the world has moved a little bit away from its U.S.-centric obsession about equity volatility in the United States and around the world to what's going on in China,' says Bob Savage, CEO of TRACK and member of the soon-to-be-launched China Analyst Network.
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February 7, 2018
What we import from China
But he can’t keep saying China is ripping us off and he’s going to stop it unless the US targets the biggest imports. The trade deficit with China is bigger than with the next eight countries combined. NAFTA? The trade deficit in cell phones and computers alone with China is bigger than the trade deficits for all goods with Mexico and Canada combined.
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February 3, 2018
China's RMB oil futures exchange—the 'story of the year'!
‍The Shanghai International Energy Exchange:blowing up more than oil : There's a lot to follow in China. And, I had missed reports about the opening of the Shanghai International Energy Exchange or INE, likely this quarter. But, during my interview with Bob Savage, the well-respected analyst of global markets and CEO of TRACK, he told me the INE could be the 'story of the year.' That's a big - and interesting - claim about something that seems like one more ho-hum Chinese entity. Bob explained that the INE will create the an RMB-denominated oil futures contract. The first such contract in a petrodollar world, where China is largest crude oil importer. If RMB oil contracts - even just for trade with China - catch on, then the whole global oil trading regime will change. And, given the massive size of the global oil trade, a shift from dollars to RMBs will both erode the dollar as a reserve currency, and push the RMB closer its goal of becoming a full reserve currency.
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January 10, 2018
'China goes private'—from financial reform to the Belt Road Initiative
[Malcolm Riddell's conversation with Harvard's Tony Saich] The State & Party's technical prowess is somewhat limited.
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January 10, 2018
What Hiring Activity Says About Firm Valuations in China
How does an obscure factor like hiring practices impact firm valuation? That was the question posed by Deutsche Bank’s quant strategy group in a 2015 whitepaper titled, “Macro and Micro Jobenomics.” The report concluded that online job postings could be used to predict U.S. macroeconomic statistics and equity market returns. This piqued my interest – I wondered whether a similar process could be used for valuing A-share companies in China.
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December 31, 2017
December 2017: Is China Actually Deleveraging? Yes and No.
China Deleveraging Insider tracks the status of China’s financial de-risking initiatives and the state of deleveraging.The most recent data from the PBoC and the CBRC show that bank asset growth hit a fresh all-time low in October. That means China is actually deleveraging – a little. It’s slow and slight, and done with a bit of trickery, but the debt load has shrunk in comparison to the size of the economy.
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December 18, 2017
What are the policy implications for China's economy from the 19th Party Congress?'
Pieter Bottelier—top China economist, former World Bank head in China, and stalwart CHINADebate expert—set the theme today: the crucial albeit unsung importance of elite technocrats in guiding China's Economic Miracle.
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November 27, 2017
Is China's Economic Power a Paper Tiger?
The People’s Republic of China has surely seen faster GDP growth than the United States for most of the past forty years. It's the value of that growth that's questionable. : The Chinese economy is strange in many ways. Not only is it a hybrid between private capital and state control, but very few people directly invest in the mainland — and yet everybody is interested in how the second largest economy in the world is going to develop. That’s because Chinese demand determines the prices of world commodities, and the operations of multinational companies in China impact earnings. When the yuan falls, markets across the world get jittery. China watchers accept the fact that official Chinese data is severely flawed, and often simply fabricated, yet they still use it to analyze the Chinese economy and markets because there are few alternatives. One alternative, however, is the China Beige Book International (CBB), a research service that interviews thousands of companies and hundreds of bankers on the ground in China each quarter. They collect data and perform in-depth interviews with Chinese executives.
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November 22, 2017
Will Chinese Commodities Derail The Global Reflation Trade?
[Leland Miller and Derek Scissors on why investor excitement over Chinese capacity cuts this winter is oversold, and the serious implications for the global reflation trade.] For over a year, commodities bulls have feasted on China. In the aftermath of the recent Communist Party Congress, many investors are now drooling over the prospect the boom will continue, based on Beijing’s promises to supercharge its campaigns against overcapacity and pollution this winter. If such pledges are fulfilled, the thinking goes, substantial chunks of steel, aluminum, and other refining capacity will be taken offline, rebalancing markets and providing rocket fuel to already frothy prices. 2018 could prove to be an even more amped-up version of 2017.
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November 8, 2017
Novel Data on China's Auto Loans - An Inefficient Market
The continued growth of China’s auto sales has relied increasingly on consumer credit, according to the WSJ; but, granular data is hard to come by. So, we created a process to collect, clean, and structure data from online auto loan offerings. Our findings imply that the auto loan market, like many credit markets in China, runs on two parallel tracks, and is woefully inefficient.
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October 19, 2017
'Inside China’s quest to become the global leader in AI'
'The RMB did not like the trade data at all, and it weakened immediately - over 1% today.' 'Overnight, the world has moved a little bit away from its U.S.-centric obsession about equity volatility in the United States and around the world to what's going on in China,' says Bob Savage, CEO of TRACK and member of the soon-to-be-launched China Analyst Network.
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October 11, 2017
Novel Data on China's Mortgage Loans
China’s banks are directed by the state, without irony, to “vigorously promote reasonable home ownership.” Their most recent annual reports repeatedly bury in the notes this line, or some variant of it, as an explanation for the explosion of mortgage lending over the previous 12 months. Granular mortgage data however, is hard to come by – so we created a process to collect, clean, and interpret that information.
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September 12, 2017
China’s property market risks are rising, says data expert
Price trends in China’s housing market are unsustainable, according to Real Estate Foresight chief executive Robert Ciemniak who worries that excessive leverage among homeowners could lead to a crisis. Real Estate Foresight founder and chief executive Robert Ciemniak has made it his business to gather and interpret real time data on China’s residential property market. He gives his thoughts on what’s to come in China’s housing market.
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September 1, 2017
The father of business consulting in China knows why eBay failed there
In the early 1990s, when China was still struggling to shrug off the straightjacket of its planned economy, the man appointed to lead the first business consulting firm allowed in the nation was immediately confronted with the scope of the challenge ahead.
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August 30, 2017
Is china prematurely declaring victory in its reforms?
At the heart of China's economic take-off during the last four decades is a fragile equilibrium between economic reforms and one­ party rule. The communist party has demonstrated pragmatism and adaptability - but just at a time when China seeks to fully enter the knowledge economy and participate in global markets, it has put the brake on further reforms.
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August 29, 2017
China's unsolved liquidity risk
The question we should ask ourselves is, how many of China’s corporate borrowers are paying off existing debt with new debt?
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August 22, 2017
Predicting Chinese stock returns
[The Largest Single—Factor Study of China’s Stock Markets] Outside observers paint China’s stock markets as a casino, where picking stocks requires as much skill as roulette, and investors avoid the country in their portfolio allocations. Patterns exist, however, if you know where to look.
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August 2, 2017
Leland Miller on Pressing China Issues
Leland Miller, the founder of China Beige Book, spoke with The Epoch Times about which investors and companies are interested in China, the latest developments in the currency, U.S.-China relations, overcapacity problems, and the One Belt One Road Initiative. : The Chinese economy is strange in many ways. Not only is it a hybrid between private capital and state control, but very few people directly invest in the mainland — and yet everybody is interested in how the second largest economy in the world is going to develop. That’s because Chinese demand determines the prices of world commodities, and the operations of multinational companies in China impact earnings. When the yuan falls, markets across the world get jittery. China watchers accept the fact that official Chinese data is severely flawed, and often simply fabricated, yet they still use it to analyze the Chinese economy and markets because there are few alternatives. One alternative, however, is the China Beige Book International (CBB), a research service that interviews thousands of companies and hundreds of bankers on the ground in China each quarter. They collect data and perform in-depth interviews with Chinese executives.
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July 19, 2017
China Cause America's Trade Problems?
[Malcolm Riddell's conversation with Yukon Huang] 'America's trade problems are not the consequence of China's policies.'
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July 19, 2017
Siri: 'Can The iPhone Prove President Trump's Wrong About U.S.-China Trade?'
[Malcolm Riddell's conversation with Yukon Huang] 'America's trade problems are not the consequence of China's policies.' 'How much of that $650 iPhone - which adds to China's trade surplus with the U.S. - actually originates and stays in China? — Only $25.'
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July 2, 2017
China Doesn’t Have A Real Estate Bubble.
Prices spike in a city. The government puts the screws on the market, and prices go down. Investment then switches to a city with lax policies. Housing prices spike; regulations tighten; prices go down. Investors move on. And so on, and so on.
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June 28, 2017
Will 'One Belt, One Road' Tank China's Economy?
'My fear is that Xi will see this initiative as an alternative to economic reform.'— Pieter Bottelier : But, the biggest threat in the near term is that Xi Jinping will see OBOR as an alternative to completing the economic reforms promised - but not delivered - in 2013's Third Plenum.
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June 21, 2017
China's stock markets—are there any patterns?
'I find evidence for dramatic size and momentum effects; that is, small stocks and recent winners are the top performers in China’s stock market. Additionally, I find that high-beta stocks modestly underperform low-beta stocks.'
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June 7, 2017
China's higher rates don't matter, yet
In fact, high yields still haven’t filtered down to borrowers. Using industrial enterprise economic indicators data, I estimated the actual interest rate paid by Chinese borrowers. Over the past six months – as corporate bond yields, SHIBOR, and WMP yields all rose dramatically – the actual interest paid by China’s industrial enterprises fell to an all-time low.
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May 29, 2017
Why A Trump–Kim Jeong Eun Summit Could Work
[Malcolm Riddell's conversation with Bill Overholt] 'If it would be appropriate for me to meet with him [Kim Jong-un], I would absolutely. I would be honored to do it.' — President Trump — May 2017:'What President Trump has done is to signal we are willing to move away from this formula that the North Koreans have to give up everything in their nuclear program before negotiations - only then we'll talk with them. I admire our U.S. negotiators, but that formula is simply absurd.'
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May 17, 2017
A new framework for china's debt problem
In fact, high yields still haven’t filtered down to borrowers. Using industrial enterprise economic indicators data, I estimated the actual interest rate paid by Chinese borrowers. Over the past six months – as corporate bond yields, SHIBOR, and WMP yields all rose dramatically – the actual interest paid by China’s industrial enterprises fell to an all-time low.
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May 3, 2017
An inflection point in china's systemic risk
Additionally, given the incentives of regulated institutions everywhere, it is likely that risks have simply begun to migrate to new and more opaque parts of the balance sheet. As China watchers, we should prepare for yet another game of financial risk whack-a-mole.
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April 26, 2017
Clearing up a few misconceptions on China's capital flight
Last year, I debunked a popular measure of trade misinvoicing as the culprit for China’s capital outflows. Today, let’s scrutinize two other misconceptions bouncing around the China commentator echo chamber.
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March 9, 2017
So many twists and turns to the China Housing markets story
[CHINADebate Presentation] One of the highlights in our recent 'In Pursuit of Patterns' series of client notes, showed that the land sales growth had tended to lead the price growth and a significant increase in land sales would lead, with a lag, to the subsequent correction in prices.—Almost everyone on the outside seems to have missed the biggest bull market in China housing in 2016, culminating in policy tightening cycle kicking in at the end of the year. But what's next?
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February 27, 2017
Is The U.S. Ceding Global Leadership To China?
'China isn't positioned to replace the U.S. as a global leader anytime soon.'—Hard on President Trump's 'American First' inaugural address, Xi Jinping gave a rousing paean to globalism at the World Economic Forum. And, immediately the hot question became: 'Is the U.S. ceding global leadership to China?' Yes and no, says Bill Overholt of the Harvard Asia Center. Yes, the U.S. is ceding global leadership. No, China won’t replace the U.S. What will replace the U.S. is ‘G-Zero’, a world with no single global leader. Not China, not the U.S. So, can his critics lay this outcome at President Trump’s feet?
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February 15, 2017
C-to-C Internet Commerce- From Taobao Shops to Taobao Villages
One is some of the local government-owned SOEs are the sources for overcapacity. The reason is because the local government also wants to ensure there's some degree of employment locally, and perhaps some source of taxation. The Chinese government is now going to need to start the so-called supply-side economics to try to consolidate overcapacity in a number of sectors. It's going to impinge on the interests of many of these local SOEs as well as the local governments who own them.
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February 15, 2017
How SOEs & Local Governments Create Overcapacity
One is some of the local government-owned SOEs are the sources for overcapacity. The reason is because the local government also wants to ensure there's some degree of employment locally, and perhaps some source of taxation. The Chinese government is now going to need to start the so-called supply-side economics to try to consolidate overcapacity in a number of sectors. It's going to impinge on the interests of many of these local SOEs as well as the local governments who own them.
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February 15, 2017
Why SOE Reform is So Tough
'...SOEs need to reform, because on one hand, many of them have achieved a lot for China. On the other hand, they've actually created quite a lot of harm, in particular in the areas of overcapacity but also in the areas of corruption we've talked about.'
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February 2, 2017
AmCham China Chairmen's View From China in D.C. 2017
[AmCham China & CHINADebate U.S.—China Trade/Business Series 2017] Terrific insights from leaders on the ground in China. While in D.C. the Chairmen joined us in a panel discussion and individual interviews about U.S. business in China, U.S.-China relations, trade, and much more. We present their views in a 13 part series. Sheryl WuDunn, business executive, lecturer, best-selling author, and winner of the Pulitzer Prize moderated.
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February 1, 2017
'Chinese Politics In The Xi Jinping Era'
[Malcolm Riddell Interviewed Cheng Li] 'If you ask any taxi driver in Beijing, Shanghai, or Guangzhou, he or she will tell you – with accuracy – which leader belongs to which faction. : 'China is a one–party state, but that does not necessarily mean Chinese leadership is a monolithic group with leaders who have the same ideas, same background, same world views, same politics. No, they're divided.'
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December 7, 2016
First 100 Days: Do Not Provoke China
The First 100 Days interview series features Pacific Council experts addressing the top foreign policy issues facing the incoming Trump administration.: Warns of the potential for new conflicts if Donald Trump follows through with his campaign promises regarding China.
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October 18, 2016
How Alibaba, Xiaomi, & Tencent are Changing the Rules of Business
[An Interview of Ed Tse, the author of 'China's Disruptors: Alibaba, Xiaomi, & Tencent... how innovative 'Disruptor' companies are restructuring China's economy.' ] The real force in Chinese economy is increasingly private companies, not SOEs. / Leading private Chinese companies are innovative and ambitious
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July 14, 2016
How 'Brexit' Will Impact China's Economy
David Dollar gives you fresh insights to better incorporate Brexit's impact into your analyses of China and global economies & markets, including: 1. Why, after the Brexit vote, did the Shanghai Stock Market fall only 1%? 2. How will Brexit affect the value of the RMB and China's currency policy? 3. How will Brexit impact trade with the EU, China’s largest trading partner? 4. Why, in the larger geopolitical perspective, could China be the big winner from Brexit?
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July 2, 2016
China housing: boom, bust, or bubble-or...?
100s of Cities Bubble Up & Down As Policy Makers Press the Levers China hasn’t collapsed. And, the bubble hasn’t burst because there may not be just one big real estate bubble. Instead, there are 100s of sizable cities, each moving in its own cycle, each responding to how its local policymakers stimulate & tighten-stimulate & tighten, and each having performance divergent from that of other cities. Watch here to see how city-level markets bubble up and bubble down...
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'Xi Jinping has made sure history is now officially on his side'

‘While there are murmurs of opposition, the historic plenary session would suggest that the future is in Xi’s hands. However, when politics is so deeply personalised and centralised, there is only one person to blame if things go wrong. Unless, of course, we get a new resolution on history that tells us who led the party astray, despite Xi’s earnest attempts to keep policy on the straight and narrow.’
by

Tony Saich | Harvard Kennedy School

|

The Guardian

November 23, 2021
'Xi Jinping has made sure history is now officially on his side'

BIG IDEA | ‘While there are murmurs of opposition, the historic plenary session would suggest that the future is in Xi’s hands. However, when politics is so deeply personalised and centralised, there is only one person to blame if things go wrong. Unless, of course, we get a new resolution on history that tells us who led the party astray, despite Xi’s earnest attempts to keep policy on the straight and narrow.’

‘For Xi Jinping, the stakes were high at the recent plenary meeting of the Chinese Communist party, with all the stops being pulled out to make sure that things would go smoothly.’

  • ‘The outcome seems never to have been in doubt and must have disappointed any foes who did not want Xi to be anointed leader into the distant future.’

‘Ostensibly the meeting was held to review the achievements of the past 100 years.’

  • ‘In reality, it was about the future.’

‘One outcome of the meeting was the publication of a resolution on past achievements, which was designed to show that Xi Jinping’s leadership today and in the future is the inevitable outcome of history.’

  • ‘The resolution will consolidate his pre-eminence within the party, empowering him to set the course for its second 100 years.’

‘Huge resources are dedicated to crafting an official history to be accepted by all.

  • ‘Woe betide anyone who challenges the official narrative.’

1 | Then There Were Three

‘It was the party’s third historical summation, placing Xi alongside Mao Zedong and Deng Xiaoping, who oversaw the first two. The first two resolutions criticised the past to legitimise setting out on a brave new path forward.’

  • ‘For Mao in 1945, it was the last nail in the coffin of his rivals for party leadership by exposing their “leftist” mistakes, which had almost brought the party to ruin.’
  • ‘For Deng, the challenge was to break with the immediate disasters of the Great Leap Forward famine and the political turmoil of the Cultural Revolution, without discrediting Mao entirely. It enabled China to move into the reform era.’’ ’

‘Xi’s purpose is distinct.’

  • ‘He is not defining the way forward by criticising the recent past but rather by highlighting how the past plays into his hands.’

‘The spotlight was on Xi, his achievements, the wrongs he has righted, and the future direction for China.’

  • ‘The resolution described Xi as the “principal founder” of the party’s ruling ideology and the “core” of its leadership; it is intended to be the key document for all party members to unite around, eradicating challenges to his policy preferences.’

2 | The Pasts and Future General Secretary

‘What can we discern from the meeting?’

‘First, barring an accident of nature, Xi will be reappointed for a third term as party general secretary at the 20th party congress (to take place in November 2022).’

  • ‘This will allow for policy continuity, rather than policy change as occurred after the previous two historical resolutions.’
  • ‘For instance, the harsher atmosphere that has enveloped the intellectual and cultural sphere in recent years will continue.’

3 | Xi’s Dream

‘What does Xi dream about?’

‘In seeking the “rejuvenation of the Chinese nation”, he envisages a China that will be more assertive and respected in the global sphere.’

  • ‘China is to become a strong, global power by 2049, a rule-maker rather than a rule-taker, capable of playing a more forceful role in determining global norms and practices. For Xi, the west is in decline while the east is rising, and this provides China with the opportunity to more effectively promote its national interests.’
  • ‘Trade and investment policies will be used to promote this agenda.’
  • ‘Despite the milder language at the meeting, China will continue to tighten control over Hong Kong and push its territorial claims in the East and South China Seas and over Taiwan.’

4 | Bringing Happiness to the Chinese People

‘But, to bring about happiness for the Chinese people, Xi’s leadership will have to keep the economy moving forward while dealing with rising social problems.’

  • ‘His leadership has identified three that are products of the party’s policies and development model: combating corruption, reducing income inequality, and confronting environmental degradation.’

‘On taking power, Xi launched a major campaign against corruption, netting political foes, officials high and low, at home and overseas.’

  • ‘One unexpected outcome was that the impact on lavish banqueting caused a number of producers of the fiery drink Maotai to go out of business, and the sales of Remy Cointreau to drop significantly.’
  • ‘The question remains whether corruption can be addressed fully without institutional reforms and greater transparency. How long can campaigning maintain momentum?’

‘China’s last few decades of economic liberalisation have transformed it from one of the most equal nations in Asia to one of the most unequal, a problematic outcome for a party that still insists on calling itself socialist.’

  • ‘Xi refers to creating “common prosperity” in China, but little concrete has been put forward to make this happen.’

‘The party could abolish once and for all the household registration system that means migrants in the major cities are treated as second-class citizens in terms of access to education, health, and benefits.’

  • ‘However, such moves are resisted by local governments, which feel they will be left to foot the bill.’

‘Experiments to date with property taxes have met resistance from real estate companies, homeowners, and local officials who would rather that their multiple property portfolios not be revealed.’

  • ‘A redistributive financial system would help but, to date, richer folk and richer areas have benefited from the current set-up.’

‘Thus, the leadership has turned to calling on the rich who, showing their patriotic credentials, have been donating billions in philanthropy.’

  • ‘However, without a political coalition and will to shift the inegalitarian fiscal structure, progress will be difficult.’
  • ‘As the United States has found, turning back inequality once it is entrenched is a tough political road to follow.’

‘Then there’s the rising pollution, which affects everybody, rich or poor, rural or urban, and has become a “quality of life” issue for the new middle class.’

  • ‘Despite recent commitments, the question is whether the party can balance sustained economic growth with environmental protections.’
  • ‘China’s addiction to coal remains a problem.’
  • ‘Its delegation, together with India’s, at Cop26 pushed the final documents to call for phasing “down” coal instead of phasing coal out.’
  • ‘Since July, China has expanded operations at 153 coalmines and production in October was the highest since March 2015.’

5 | Until the Next Resolution

‘While there are murmurs of opposition, the historic plenary session would suggest that the future is in Xi’s hands.’

  • ‘However, when politics is so deeply personalised and centralised, there is only one person to blame if things go wrong.’
  • ‘Unless, of course, we get a new resolution on history that tells us who led the party astray, despite Xi’s earnest attempts to keep policy on the straight and narrow.’