Two Views on China

Yesterday, Aron Sarin published an article at Quillette titled  Beijing in Retreat.   Also yesterday, Barrons published China’s Comeback is Getting Started.  (“Stocks Soar as China Revs Up its Reopening” in the print version)  You can read the Quillette piece for yourself, and should, but the Barrons article will require a subscription.

To summarize, the Quillette piece focuses on China’s birthrate deficit (likely to be exacerbated in the future by the memory of the bad treatment of pregnant women during the lockdowns, as well as by a pervasive feeling of gloom about the future)…China’s inability to manufacture high-end semiconductor chips…pervasive corruption…and the fact that in the modern world…the persistence of poverty….and declining trust in the CCP.  “The Chinese people learned that they can enjoy no certainty about the future and that Xi’s obsession with order leads, paradoxically, to chaos.”

The tone of the Barrons piece is rather different:

The catalyst is clear.  Policy makers in the world’s largest economy are pulling out the stops to revive the economy and get its 1.4 billion people spending more, after three hard years of stringent Covid restrictions and harsh crackdowns on technology and other industries.  Beijing has totally reversed its zero-Covid policy and had begun loosening regulations on business.  Up next: more stimulus to stabilize the residential property market.  “Domestically, all the switches that can be switched on have been moved toward growth, and there’s a lot of momentum behind it,” said David Semple of the VanEck Emerging Markets fund.  

(I’m reminded of Shakespeare’s passage in which Glendower says, “I can call spirits from the vasty deep,” to which Hotspur replies, “Why, so can I, or so can any man;  But will they come when you do call for them?)

Various metrics are cited to suggest a recovery: Subway traffic across 23 cities has returned to prepandemic levels, hundreds of millions are traveling for the Lunar New Year,  Citigroup analysts expect the domestic travel industry to recover to more than 85% of pre-Covid levels by the second half of this year.

The article notes that China is a formidable rival to the US in the ‘renewable energy’ sector, given its strengths in battery technology and rare-earth minerals.  It also notes that Chinese policy makers wanting to address the birthrate decline “might offer incentives for couples to have children, such as cash payouts or even making workplace promotions conditional on having a child.”  (Future conversation: “Mommy, why did you and daddy decide to have me?”  “Well, son….)

Abhay Desphande of Centerstone seems less optimistic about China’s future than many of the other individuals quoted:  “Xi is boxed in with multiple policy failures with his gambits with the US, his approach to the private sector and real estate, and people angry i the streets.  One lever he can pursue very aggressively is the economic lever to get people working,  get the economy going.  And even though he may change his attitude toward private enterprises in a few years, for now, he needs that part of the economy to work.

My question would be whether Xi can really step back from his highly centralizing worldview enough to truly reignite sustainable economic growth, however much he wants to.

China remains, of course, a formidable economic power, and there are many, many important products required by the US and other countries whose supply requires Chinese participation, either for the complete products or for essential components and materials.  Semiconductors are far from being the only items that are essential to the US economy and to the welfare of its people.  And the US economy, especially in manufacturing but by no means limited to that industry,  is being hampered by the worldview of the present administration, which is itself very centralizing in its orientation.

Your thoughts?

A Serious Temptation

So – I established the practice of wearing late Victorian or Edwardian-style outfit when out doing a book event; everything from a WWI-era grey nurses’ dress with a white apron and kerchief, to a black taffeta bustle skirt and jacket with a blue ribbon sash hung with orders and jewels and a white widow’s bonnet (a la Queen Victoria). It’s an attention-getter in a room full of other authors and readers, and a wonderful social icebreaker/conversation starter: Hi, my name is Celia, I write historical fiction, so I like to dress the part!

Read more

“How Twitter Pushed Stakeholders under the (Musk) Bus”

Here.

Abstract:

This paper provides a case study of the acquisition of Twitter by Elon Musk. Our analysis indicates that when negotiating the sale of their company to Musk, Twitter’s leaders chose to disregard the interests of the company’s stakeholders and to focus exclusively on the interests of shareholders and the corporate leaders themselves. In particular, Twitter’s corporate leaders elected to push under the bus the interests of company employees, as well as the mission statements and core values to which Twitter had pledged allegiance for years.
 
Our analysis supports the view that the stakeholder rhetoric of corporate leaders, including in corporate mission and purpose statements, is mostly for show and is not matched by their actual decisions and conduct (Bebchuk and Tallarita (2020)). Our findings also suggest that corporate leaders selling their company should not be relied upon to safeguard the interests of stakeholders, contrary to the predictions of the implicit promises and team production theories of Coffee (1986), Shleifer-Summers (1988) and Blair-Stout (1999).

There is tension between the interests of owners and those of other “stakeholders”, which is why the interests of non-owner stakeholders require justification as in the linked article. The authors beg the question — they assume stakeholder interests are comparable to owner interests — then find a problem because Musk values his ownership interest in Twitter above the interests of the people he bought out and of the company’s non-owner employees. So what should Musk get in exchange for the $billions he spent? Arguments for more stakeholder rights are arguments for less property rights.

Terf War

It’s truly become amazing to me, how very vicious the trans war is getting to be; so far, it’s only words, but only words is how unspeakable atrocities begin. And all this is over what is a vanishingly small minority, but which happens to be “the fashionable hot new thing to shock the normies with” among overexposed celebrities, activist academics, and the desperate-seeking-relevancy activists battening onto a cause to give purpose to otherwise empty lives. It’s a trend amplified a hundred times by such advocacy, and then another hundred by the leviathan of social medial; a leviathan before which established corporations and businesses tremble. Candidly, one might have expected titans of commerce (like Target and the Disney company) possessing sufficient market knowledge to stay away from advocating causes which might – just might – piss off a large portion of their customer base. And one might be wrong. Never underestimate the mad urge to be a dedicated follower of fashion, I guess.

Read more