China

Two Views on China

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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?

If you think Congress does not work, thank John McCain

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John McCain was elected to the Senate in 1986, taking Barry Goldwater’s seat after two terms in the House. In 1987, as a rather naive =freshman Senator, he was involved in the “Keating Five” affair This involved assistance to a constituent of McCain’s but was, in fact, a Democrat influence peddling matter. McCain was included chiefly to make it “bipartisan.”

The five senators—Alan Cranston (Democrat of California), Dennis DeConcini (Democrat of Arizona), John Glenn (Democrat of Ohio), John McCain (Republican of Arizona), and Donald W. Riegle, Jr. (Democrat of Michigan)—were accused of improperly intervening in 1987 on behalf of Charles H. Keating, Jr., Chairman of the Lincoln Savings and Loan Association, which was the target of a regulatory investigation by the Federal Home Loan Bank Board (FHLBB). The FHLBB subsequently backed off taking action against Lincoln.

Lincoln Savings and Loan collapsed in 1989, at a cost of $3.4 billion to the federal government (and thus taxpayers).

This experience affected McCain severely, making him obsessed with his reputation and leaving him open to more manipulation by Democrats. What followed was The McCain Feingold Act also known as the “Bipartisan Campaign Reform Act.” It made a huge change in the way Congress conducted business.

McCain-Feingold tilted influence in our political system toward the ideological extremes. For centuries, political parties played a moderating role: Because they comprise a broad coalition of interests, parties had to mediate among competing constituencies, looking for ­middle-ground positions that would draw maximum support. Traditionally, they used their preponderance of resources to impose discipline on extremists who threatened party comity.

That description is pretty much nonsense. What it really did was to place legislation in the hands of Congressional staffs and lobbyists. Congress members spend their days and months raising money while staffs and lobbyists write the laws. That is why Nancy Pelosi told us that “we have to pass the bill to find out what is in it.” She was referring to Obamacare but it applies to all legislation the past 18 years since McCain Feingold.

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What is going on with China right now ?

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China was admitted into the World Trade Organization in 2001 with the understanding that they would participate in free trade and to international norms.

Until the 1970s, China’s economy was managed by the communist government and was kept closed from other economies. Together with political reforms, China in the early 1980s began to open its economy and signed a number of regional trade agreements. China gained observer status with GATT and from 1986, began working towards joining that organization. China aimed to be included as a WTO founding member (which would validate it as a world economic power) but this attempt was thwarted because the United States, European countries, and Japan requested that China first reform various tariff policies, including tariff reductions, open markets and industrial policies.

That has not happened. China has followed a mercantilist trade policy, stealing intellectual property, requiring companies selling to the Chinese to share ownership with often corrupt entities owned by the Peoples Liberation Army and relatives of regime principals.

Mercantilism is a policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, tariffs and subsidies on traded goods to achieve that goal. These policies aim to reduce a possible current account deficit or reach a current account surplus. Mercantilism includes an economic policy aimed at accumulating monetary reserves through a positive balance of trade, especially of finished goods. Historically, such policies frequently led to war and also motivated colonial expansion.[1] Mercantilist theory varies in sophistication from one writer to another and has evolved over time.

America has been largely passive in tolerating this behavior until Donald Trump became president. Some of this passivity may reflect Chinese influence with US politicians.

While it may seem politics as usual in Washington today, some are alarmed.

“Nobody in the 1980s would have represented the Russian government. And now you find so many lobbying for the Chinese government,” said Frank Wolf, a retired U.S. representative from Virginia who long served as the co-chairman of the Tom Lantos Human Rights Commission. “I served in Congress for 34 years. I find it shocking.”

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China and Hong Kong are coming to some sort of decision.

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The Hong Kong demonstrations are still going on.

Now, The CCP has been sending troops into the city, saying it is just a troop “rotation” but no photos of troops leaving have been seen.

Michael Yon, who covered Iraq and Afghanistan, is onscene.

He is also watching both Koreas. He considers neither trustworthy.

The proximate cause of the Korea-Japan “dispute” is Korean cultural weakness that magnifies, amplifies, fertilizes any paper cut into gangrene. The USA and Japan must be prepared to amputate South Korea. The day is coming.

Korea has an unstable mind and culture. Korean Lives Matter: they create drama from thin air. Drama Queen, meet Drama Korea.

Korea (North and South) is the proximate cause of the disputes between Koreans, Americans, Japanese. The proximate cause is a volatile and primitive Korean culture.

The ultimate cause of the disputes is China. Core China culture runs Korea as a barnyard animal.

As for Hong Kong, Strategic Elegance: “Home Depot says suppliers are moving manufacturing out of China to avoid tariffs”

Some of the jobs probably moving to countries like Taiwan and Vietnam.

Think about this for a moment:

1) China loses jobs, and thus economic clout and expansion money. Some Chinese workers likely become unemployed…while China is having some food supply problems (true extent unknown to me).

2) Chinese jobs move to other countries that we can get along great with, such as Taiwan. Taiwan grows economy, becomes tighter with USA, and buys US goods (including weapons) as economy increases. US weapons can be used to blunt China’s false claims in Taiwan.

3) Taiwan and others buying more US goods (including weapons) increases American jobs and economy, which helps fund “the wall.”

Win win win for the good guys and gals. Lose lose lose for CCP.

Hold strong Hong Kong! Hong Kong does not have to beat CCP — only outlive.

We are entering very dangerous times and the media sees only the politics of 2020.

Watch that Steve Bannon video at SDA. He thinks that if the CCP goes into Hong Kong to do another Tiananmen Square, the CCP will collapse.

Is China involved in the Russia-Trump hoax ?

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We have been subjected to a year and a half, almost two years, of constant hysteria about Russia and whether they helped Trump win the 2016 election. There has been no evidence of any collusion and the Mueller “special counsel” investigation seems to be winding down.

Rush Limbaugh has some interesting ideas about what is going on.

So the only possible way they can get rid of Trump here is via politics, and that’s to drive his approval numbers down so that Republicans in Congress have no reason to support him. If Republicans in Congress — the House and Senate — could be forced to abandon their support for Trump, as happened to Nixon, then he would have to go. I don’t know if Trump would play ball even in that scenario like Nixon did. I think Trump would dare them to impeach him and try to remove him. I don’t think Trump’s gonna play ball the way the establishment thinks.

Democrat voters are highly motivated to vote in the November election, at least in part, to impeach Trump. Why ?

There seems to be no letup in the frenzy to demonize Trump.

In 21st-century America, it is difficult to conjure the possibility of the federal government taking an eraser to the map and scrubbing away an entire ethnic group. I had arrived in Columbus at the suggestion of a Cleveland-based lawyer named David Leopold, a former president of the American Immigration Lawyers Association. Leopold has kept in touch with an old client who attends the Mauritanian mosque. When he mentioned the community’s plight to me, he called it “ethnic cleansing”—which initially sounded like wild hyperbole.

“Mosque.” Hmmm.

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