Friday, July 2, 2021

CCP Centennial: The Chinese Economic Miracle

The Chinese Communist Party (CCP) was founded one hundred years ago on July 1, 1921. The party has transformed China from a poor and backward third world country into a vibrant and prosperous industrialized economy. This rapid historic transformation has surprised everyone, including China's friends, but especially its western foes who now see the emergence of the Asian giant as a challenge to centuries-long western domination of the world. It has also earned the CCP high levels of performance legitimacy and popularity among the Chinese people. The CCP's successful response to the COVID crisis has further boosted its legitimacy and popularity in China. 

China Surpassed United States in Global Trade

Chinese Economy:

Over the last several decades, China has built a strong manufacturing base to serve as the factory to the world. This efficient industrial base is being used by all major global brand-name multi-national giants to manufacture and supply everything from Barbie dolls to iPhones. It has served as a powerful engine to drive the Chinese economy which now rivals the US economy in size. China's GDP overtook the U.S.'s in 2017 in terms of purchasing power parity, according to Nomura Securities. China has eclipsed the United States as the world's largest trading nation.

Japanese Government Projection of Future GDP Trajectories. Source: Nikkei Asia

China's Economy Slowing:

There's some evidence that China's economy is slowing after hitting a peak growth in the last decade, according to Forbes magazine.  It may sound like wishful thinking but the American magazine argues that "China’s growth has slowed in recent years, partly due to maturity. Extremely poor countries have the potential to grow rapidly. As they approach the level of developed countries, growth is harder and thus slows".  

China Economy Slowing. Source: Forbes

Digital Economy:

The United States is far ahead of China in global digital economy. But the US-China battle for future dominance of this economy is now underway. The winner of this contest will dominate the next phase of global economic competition. It will be determined by achieving mastery of computer chips and software needed to build complex systems. 

The United States and its ally Taiwan are far ahead of all other nations in building the most advanced 5 nanometer semiconductor components. But China is gearing up for it. Chinese leader Xi Jinping has appointed Liu He, his most trusted lieutenant, as the "chip czar" to lead this effort as a top national priority. 

Technology firms today make up a quarter of the global stock market and the geographic mix has become strikingly lopsided, according to The Economist magazine. America and, increasingly, China are ascendant, accounting for 76 of the world’s 100 most valuable firms. Europe’s tally has fallen from 41 in 2000 to 15 today.

China's Research Spending. Source: Nature 

Performance Legitimacy:

The failure of  western-style "democracy" to handle the COVID crisis has raised serious questions about its legitimacy. Countries from the United States and the United Kingdom to Brazil and India miserably failed to prevent millions of deaths from the coronavirus pandemic. On the other hand,  the Communist Party in "authoritarian" China has done a remarkable job of protecting its people from the dreaded virus. 

A recent post-COVID survey conducted by the Washington Post shows that Chinese citizens’ trust in their national government has jumped to 98%. Their trust in local government also increased compared to 2018 levels — 91% of Chinese citizens surveyed now said they trust or trust completely the township-level government. Trust levels rose to 93% at the county level, 94% at the city level and 95% at the provincial level. 

An earlier 2018 World Values Survey reported that 95% of Chinese citizens said that they have a great deal or quite a lot of trust in national government. Comparatively, about 69% felt the same way about their local government. 

The Chinese Communist Party (CCP) has demonstrated that the western style elections and democracy are not the only means to earn legitimacy in the eyes of the people. It has shown that it is far better to deliver results to earn "performance legitimacy". 


As the Chinese Communist Party (CCP) celebrates its centenary, independent surveys indicate that the party has achieved well-deserved performance legitimacy in the eyes of the Chinese people. Over 90% of those surveyed have expressed strong approval of the Party's rule. The CCP has transformed China from a poor and backward third world country into a vibrant and prosperous industrialized economy. 

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Wu said...

A government's ultimate legitimacy is bringing their people a good life, the west tries very hard to make people believe China is a hell on earth to live in, but only we Chinese know what we had been through over the past 100 years and how we really live now in China.

Riaz Haq said...

Wu: "A government's ultimate legitimacy is bringing their people a good life...."

In the movie "White Tiger", lead character Balram sarcastically compares India's democracy with China's sanitation system. “If I were in charge of India, I’d get the sewage pipes first, then the democracy.” Numerous scenes in the film illustrate poor sanitation in India by showing Balram and others squatting and defecating in the open.

Mayraj F. said...

. The CPC has been responsible for leading by far the greatest improvement in the conditions of the greatest proportion of humanity in the whole of human history. This is not boasting, a rhetorical statement, or one by an overheated patriot, or a dogmatic Marxist. It is simply a statement of fact. But such a gigantic human fact necessarily has the greatest implications not only for China but for the world and provides a starting point for international comparisons and analysis. It also provides the starting point for any international communication of China.

In 1949 China was almost the world’s poorest country – only two Asian and eight African countries had lower per capita GDPs than China.[4] By 2020 China had not only eliminated absolute poverty and achieved “moderate prosperity” by its own domestic criterion, but it was on the brink of becoming a “high-income economy” by international World Bank standard – this goal will be achieved by 2023.

This is not simply, or even primarily, an economic achievement, its most important consequence is gigantic improvements in human living standards, life expectancy, education, culture, the ability to take real choices in life and innumerable other dimensions of human welfare.

As is well known this unparalleled improvement in the life of humanity was achieved in two waves which were different but interrelated – it is extremely important both objectively and for international communication to stress their interrelation as one of the more subtle means of international attacks on China is to attempt to separate them by the theory of “historical nihilism” by which one or other of these phases is denigrated and its achievements denied.

From 1949-1978 the basis of China’s economic achievement was laid in the creation of the foundations of modern industry. But over and above that its overall impact was that China accomplished the largest “social miracle” in human history. As is well known to economists, average life expectancy is the best overall indicator of social conditions as it takes all positive developments (rising incomes, good education, good health provision, environmental protection), subtracts all negative ones (poverty, lack of education, poor health provision, environmental damage) and reduces them to a single number – average life expectancy. In 1949 China’s people lived three years less than the world average, by 1978 they lived over five years longer than the world average. In short, in 1949-78 China went from a country with living conditions well below the world average to those well above it. As China in 1978 was 22% of the world’s population never in human history had such an immense step forward in relative social conditions of such a large proportion of humanity taken place.

Mayraj F. said...

Then from 1978, with the introduction of “reform and opening up”, China achieved the fastest economic growth every achieved by a major country in human history. From 1978 to 2020 China’s annual average GDP growth was 9.2% – its economy grew in size more than 40 times. No other country in history has achieved such a high growth rate over such a sustained period. The “socialist market economy” which achieved was in line with Marx but was also in practical terms an historically unprecedented economic system. The correct reforms in the introduction of this socialism market economy, of reform and opening up, allowed China to avoid the economic stagnation which had struck the USSR by the 1970s. The CPC’s success was therefore not purely practical but also in the realm of theory – the conceptualisation and introduction of an economic system which has proved itself the most successful in the history of humanity. Whereas the policies introduced from Gorbachev onwards in the USSR resulted in national and economic catastrophe for Russia, by opening up the way to the restoration of capitalism under Yeltsin, China’s “reform and opening up” ensured the success of socialism in China. Furthermore, while there is not the space to analyse this issue at length here, this was only one of the great theoretical achievements of the CPC which produced a quite different and successful outcome compared to the USSR. In summary the success of the CPC was not only practical but deeply theoretical.
For such a large country to go in only just over 70 years, a single lifetime, from such poverty to a high-income economy is historically without parallel.

It is clear that no other country in human history has even come close to delivering the benefits of such economic development to such a large proportion of the world’s population. The first country in human history to experience rapid economic growth was Britain at the time of the Industrial Revolution – this was 2% of the world’s population. The US, after its Civil War, experienced rapid growth that affected 3.2% of the world’s population. The Soviet Union’s rapid growth after 1929 was with 8.4% of the world’s population. But China at the beginning of its rapid economic growth was 22% of the world’s population. China’s economic growth therefore benefitted an almost three times greater proportion of humanity than any other country which had ever experienced rapid economic development.

In terms of the benefit to the population in average living standards, between 1978 and 2020 China’s household consumption grew by 1,800 percent – average household consumption in China increased 18 times. The next large country after this was Indonesia, at a 920% increase in the same period. China improved household consumption more than twice as much as any other large country.

To understand the global impact of such an unprecedented development it is simply necessary to note that China has a bigger population than all other countries with high income economies put together – China is nearly 18% of the world’s population, while all existing high-income economies are 16%. China entering the ranks of high-income economies will therefore more than double the number of people in the world living in high income economies – a globally transformative event.

China has eliminated absolute poverty, lifting 853 million people out of World Bank internationally defined poverty – three out of four people lifted out of poverty in the world. In summary global poverty reduction is above all due to China.

As already noted, beyond the direct effects of economic development, the best index of a country’s overall living conditions is average life expectancy. By far the most important factor in this is per capita GDP – statistically it accounts for 73% of life expectancy. However, 27% is not accounted for by per capita GDP. Therefore, it is possible to measure the effect of other social conditions by whether life expectancy is above or below that which would be expected for a country with that level of per capita GDP.

Riaz Haq said...

Marking Party’s #Centennial, Xi Warns That #China Will Not Be Bullied. A century after the Communist Party’s founding, China’s leader said foreign powers would “crack their heads and spill blood” if they tried to stop its rise. #CPC100Years #UnitedStates

China’s rise is unstoppable, Xi Jinping declared. The country will not be lectured. And those who try to block its ascent will hit a “Great Wall of steel.”

Mr. Xi, the most powerful Chinese leader in generations, delivered the defiant message in a speech in Beijing on Thursday that celebrated 100 years of the Chinese Communist Party.

The speech was laden with symbols intended to show that China and its ruling party would not tolerate foreign obstruction on the country’s path to becoming a superpower. The event’s pageantry symbolized a powerful nation firmly, yet comfortably, in control: A crowd of 70,000 people waved flags, sang and cheered in unison. Troops marched and jets flew overhead in perfect formations. And each time Mr. Xi made a pugnacious comment, the crowd applauded and roared approval.

At times, Mr. Xi’s strident words seemed aimed as much at Washington as at the hundreds of millions of Chinese who watched on their televisions. The biggest applause from the handpicked, Covid-screened audience on Tiananmen Square came when he declared that China would not be pushed around.

“The Chinese people will never allow foreign forces to bully, oppress or enslave us,” he said, clad in a Mao suit. “Whoever nurses delusions of doing that will crack their heads and spill blood on the Great Wall of steel built from the flesh and blood of 1.4 billion Chinese people.”

Mr. Xi’s address was one of the most anticipated of his nearly nine years in power and was all the more significant because he seeks to extend his rule. The celebration was Mr. Xi’s chance to cement a place, at least implicitly, on a dais of era-defining Chinese leaders, above all Mao Zedong and Deng Xiaoping.

Mr. Xi has sought to portray himself as a transformative leader guiding China into a new era of global strength and rejuvenated one-party rule. And the stagecraft was focused on conveying a modern, powerful nation largely at ease while much of the world still struggles with the pandemic.

He trumpeted the party’s success in tamping down Covid-19, reducing poverty and firmly quashing dissent in Hong Kong, the former British colony. With splashes of bellicose rhetoric, he dismissed challenges from abroad, asserting that Beijing had little appetite for what it saw as sanctimonious preaching.

Low said...

It seems highly unlikely Chinese economy will be 40 Trillion by 2060. It's expected to surpass America in a decade, that would take it to around 25 Trillion plus.

By 2060, it will be much larger then 40 Trillion, either it's a highly conservative figure, or deliberately lowered.

Riaz Haq said...

Low: "By 2060, it will be much larger then 40 Trillion, either it's a highly conservative figure, or deliberately lowered."

The answer will depend on the outcome of #US-#China #technology war that's now underway. #America is trying to slow China down by imposing curbs on sales of high-end #semiconductors & semi #manufacturing equipment, an industry dominated by the US.

Mayraj F. said...

No other party has achieved what it has. By the way, I have google alerts on China to find articles on local government related info. These alerts have picked up nonrelated material also, So for years I have seen demonization of China in the media. What US is doing now is just ramped up demonization. It reveals a desperation and makes no sense as will do more self harm than anything else. US policy just reveals policymaking bankruptcy in ability to adjust to change.

Mayraj F. said...

CPC Transforms China as World Class Power
It achieved twin goals of getting rid of poverty and standing up to bullying by foreigners by developing “socialism with Chinese characteristics” and realising that development, not ideology, is the hard truth.
M.K. Bhadrakumar 02 Jul 2021

This is the season to re-read Edgar Snow’s Red Star Over China, the classic work on the birth of the communist movement in China. Alongside John Reed’s Ten Days That Shook the World, the gripping eyewitness account of the Bolshevik Revolution, Snow’s book was compulsive reading in the first flush of revolutionary enthusiasm as college students.

Then, inevitably, time took its toll. There is a famous work The Anatomy of Revolution (1939) by the American historian of France Crane Brinton which outlines the uniformities of four major political revolutions — the English Revolution of the 1640s, the American, the French, and the 1917 Russian Revolution. Brinton concluded how revolutions followed a life-cycle from the Old Order to a moderate regime to a radical regime, to Thermidorian reaction.

He likened the dynamics of revolutionary movements to the progress of fever. Brinton’s book appeared a full decade before the Chinese revolution. However, although much water has flowed down the Yangtze since the “Thermidorian reaction” set in, there is still keen delight in the precarious notions the Revolution left behind in China, which are both dramatic and didactic and inspire animated discussion.

Without doubt, the Communist Party of China (CPC), whose centennial falls on July 1, has a great deal to celebrate. It took almost three decades after the revolution (1949) for the CPC to realise that development, not ideology, is the hard truth.

In Deng Xiaoping’s words, “It doesn’t matter if a cat is black or white so long as it catches mice.” Those poignant words signalled that China was changing course and embarking on a radically new development path required to meet the country’s actual conditions at that point in time. Deng’s reform and opening up in 1978 unshackled China from the ideological straitjacket.

When Mao died in 1976, China’s per capita GDP was more or less that of Bangladesh. Today, the United States feels greatly agitated that China is the world’s second largest economy already and well set to overtake it before the end of this decade.

The World Bank estimates that the CPC lifted 800 million people out of absolute poverty in the four decades since 1978, a stupendous feat in human history. In 2012, Xi Jinping as the new General Secretary of the CPC Central Committee pledged that the 100 million people who were still below poverty line would move up the ladder by 2020. He redeemed that pledge last December as China became completely free of poverty.

To spearhead the poverty alleviation programme, from 2013 to 2020, the CPC selected and dispatched as first Party secretaries and resident working team members to rural and remote areas to accurately identify each and every poor family and poor village, and implement targeted projects nationwide to comprehensively improve their lives and livelihood.

It is precisely this unique Party-State system that explains China’s epochal rise. The CPC is omnipotent in China and has become synonymous with the nation, the society and its politics. Succinctly put, national development flows from the robust pursuit of long-term goals set by the CPC.

The Party system is based on educated, competent functionaries who have risen to the top with grassroots experience in multiple provinces that moulded their national outlook, which makes the top leadership collegiate and helps consensus-building on major national issues.

Ahmed said...

Dear Sir

I have something important to share with you, this is a video of a Pakistani lady named "Dr.Sarah Qureshi, she has been working on making engines of planes with her father. Her father is a Scientist and she has done her Phd.

This is her interview on HUM TV in Pakistan ,and I think she is the only lady in entire Asia who could make engines of aircrafts.

Now the question is that this interview was taken somewhere in 2019, it has been 2 years now, didn't PTI government learn about this talented and skilled lady?

What are governments in Pakistan doing? This is the reason why Pakistan is lagging behind, since the talented and skilled people are not given importance. She is now working with her father who is a scientist which is good but if government of Pakistan supports their work then I am sure that Pakistan will be able to produce high quality engines of the aircrafts in the future and not only these engines can be used locally in commercial and airforce planes but Pakistan can also export these engines to other developing countries.

Pls check this:

Riaz Haq said...

Debt, not demographics, will determine the future of China’s economy

In May, Beijing belatedly released its latest 10-year census data, setting off warnings in China and abroad that the country was facing a demographic crisis. But the world may be misreading the implications of China’s population changes.

How well China responds to its worsening demographics will have more to do with how China’s economy adjusts from its investment-led growth model—and, primarily, how it adjusts its reliance on debt.

This doesn’t mean there won’t be direct demographic consequences. With China’s working population declining by 0.5% to 0.6% a year over the next several years, productivity growth per worker must be higher than it has been over the past two decades to achieve the same amount of GDP growth.

This matters when we project China’s long-term growth rates. Beijing announced last year that it expected to double China’s real GDP in the next 15 years. This requires average real GDP growth of 4.7% a year. Yet a declining working population means that China’s productivity per worker must increase at a faster rate: 5.2% to 5.3%, rather than the 4.5% it would have needed when the working population was still rising.

We can perhaps see these consequences more clearly by focusing on balance sheet implications. One advantage of a growing working population is that the amount of debt that must be supported by each worker automatically declines over time.

The opposite is true with a declining working population. Total debt in China represents at least 280% of China’s GDP, according to government figures. If China’s future GDP growth requires the same level of credit growth as it has in the past, then China’s debt-to-GDP ratio must rise to somewhere between 400% and 500%: an unprecedented level of debt, especially for a developing country.

Adjusting for a declining working population makes the numbers even worse. As the working population declines by 0.5% to 0.6% a year, the amount of debt per worker rises by an additional 2% to 3% of GDP every year.

These are bad numbers, but they do not in themselves represent a crisis. This is because China’s debt trajectory was already unsustainable, and the main impact of China’s adverse demographics will be to accelerate the adjustment. That is why China’s leadership must either resolve its overreliance on debt or—like most countries that have followed a similar growth model—be forced to do so in a way likely to be economically painful.

There are broadly speaking four ways China can “resolve” its rising debt burden.

The first—long promised by government officials—is to transform the economy away from the no-longer-productive infrastructure and property sectors. Although historically hard to execute, in principle redirecting funding into high-tech and other productive sectors allows investment growth to remain high without requiring even faster growth in debt.

The second—promised by China’s more sophisticated economic policymakers—is to replace declining investment with rising consumption to drive GDP growth. This effectively means sharply shrinking the government share of GDP and redirecting it to the household sector so as to allow China to maintain growth targets without the reliance on debt that is necessary to sustain current investment levels.

The third and fourth ways involve a collapse in GDP growth. One way would be for a very sharp—and presumably short-term—contraction in GDP driven by a financial crisis, although this is still unlikely in the case of China’s highly controlled financial system. The other would be a Japanese-style “lost” decade—or more—of very low growth as China slowly rebalances and struggles with its debt.

Terry A. said...

I am SHOCKED at the statement below saying :
“ The CCPs successful response to the Covid crisis has further boosted its legitimacy & popularity in China “ ........ ABSOLUTE BULLSHIT in my view and the views of hundreds of millions around the globe
Including a majority of Pakistanis .........
The CCP had intentionally released this Covid virus to the rest of the World hoping to cripple & kill innocent people in other countries ( BUT THEY LOCKED DOWN AND STOPPED THE SPREAD TO THE REST OF CHINESE CITIES )

Riaz Haq said...

Terry: "The CCP had intentionally released this Covid virus to the rest of the World hoping to cripple & kill innocent people in other countries"

You have shared a debunked conspiracy theory spun by western politicians, particularly Americans, to cover up their own failures in handling the covid pandemic. Please read the following:

“A group of 27 prominent public health scientists from outside China is pushing back against a steady stream of stories and even a scientific paper suggesting a laboratory in Wuhan, China, may be the origin of the outbreak of COVID-19. “The rapid, open, and transparent sharing of data on this outbreak is now being threatened by rumours and misinformation around its origins,” the scientists, from nine countries, write in a statement published online by (highly respected British medical journal) The Lancet”

Riaz Haq said...

How China became the big winner of the COVID era
US is buying even more goods from China than it did before the pandemic

When news first broke of the COVID lockdown in Wuhan, the initial prediction was: The virus will cripple the economy of China, which is the engine of global trade, and that will be terrible for the shipping business.

Eighteen months and 3.9 million deaths later, the pandemic has had the opposite effect. Ships are full and, ironically, the country where the outbreak began has seen the biggest and broadest economic upside.

Chinese exports are now much higher than they were before the outbreak, courtesy of pandemic-induced changes in consumer behavior and COVID-driven fiscal stimulus from the world’s governments.

The only major economy to grow in 2020 was China’s. GDP growth continued in Q1 2021. Business is at an all-time high for Chinese liner operators, shipyards and container-equipment factories.

U.S. demand for Chinese exports is increasingly urgent as sales continue to offset inventory rebuilds. Trade has revved up in the opposite direction, as well: China is buying more American soybeans, crude oil, propane and natural gas.

Pandemic boosts Chinese trade
Nerijus Poskus, vice president of global ocean at Flexport, recently told American Shipper, “Back in 2020, if you’d asked 100 economists what would happen when COVID first hit China, all of them would have probably said that economies will go down, consumption will go down and prices for shipping will fall. Well, all of them would have been wrong.”

Very wrong: China’s export value in January-May averaged $247.5 billion per month, up 29% from January-May 2019, pre-COVID, according to the country’s customs data.

As more goods are going out, supporting container-shipping demand, more raw materials and commodities are coming in, employing tankers, bulkers and gas carriers. China’s import value averaged $206.8 billion per month in January-May, up 25% from the same period in 2019.

Turning trade into even more business
When demand for ocean transport surges, so too does demand for shipbuilding, container manufacturing and global liner operations. The U.S. has virtually no presence in these sectors. China is the world leader in the first two and a major force in the third.

As of Jan. 1, 2020, pre-COVID, Chinese shipyards had commercial orders totaling 29.8 million compensated gross tons (CGT), according to U.K.-based valuation and data provider VesselsValue. At that point, China — which was already the world’s largest shipbuilding nation — accounted for 38.7% of the global orderbook.

The Chinese yards’ orderbook was 26.9 million CGT as of Thursday, according to VesselsValue. While that is down from pre-COVID (orders dropped worldwide in Q1-Q3 2020 and partially rebounded thereafter), China’s share of the global orderbook is now 40.5%, even higher than it was before the pandemic.

China’s dominance is far more extreme in container-equipment manufacturing. Over 96% of all the world’s dry containers and 100% of reefer containers are manufactured in China. Factories produced 2.66 million twenty-foot equivalent units (TEUs) of containers in the first five months of this year, according to data from U.K.-based consultancy Drewry.

“I would be surprised if the 5-million-TEU mark is not exceeded in 2021,” commented John Fossey, Drewry’s head of container equipment and leasing research. The previous record was 4.42 million TEUs in 2018. If 5 million TEUs were produced this year, it would represent a 61% increase compared to last year and a 77% increase versus 2019.

In the liner sector, China’s COSCO Group (including OOCL) is the world’s fourth-largest container player, with a fleet capacity of 3 million TEUs, according to Alphaliner. Like all ocean carriers, COSCO is reaping historic profits from COVID-era consumer demand; the shipping division of COSCO posted a profit of $2.7 billion for Q1 2021, more than it earned in all of last year.

Riaz Haq said...

Fareed Zakaria: "America has been the comeback nation of the last decade. I think this is still not fully appreciated and understood by many people, the fact that America's share in the global economy, contrary to all the pessimism that existed exactly a decade ago, has ended up going significantly higher over the last decade"

Joining me now is Ruchir Sharma. He is the chief global strategist at Morgan Stanley Investment Management and the author of "The 10 Rules of Successful Nations." So, Ruchir, let me start by asking you, is it fair for people to look at the -- the American economy, post-pandemic, and say, you know, it is now booming, or the boom that -- that existed pre-pandemic, you know, we're back to that -- to that? Is that really what's going on, in long historical context?

RUCHIR SHARMA, CHIEF GLOBAL STRATEGIST, MORGAN STANLEY INVESTMENT MANAGEMENT: Yeah, hi, Fareed. I think so. Because we went through the last decade, for the first time in American history, without a recession in the U.S. We had the pandemic-induced recession, which was, in many ways, artificial, and now we are back to where we were, where we left off, the only difference being that we have spent a lot of bullets in fighting this pandemic, from an economic standpoint, in terms of the deficits we are running and the debt we have been forced to tack on to (inaudible) with this pandemic.

But the main point here is this, that America has been the comeback nation of the last decade. I think this is still not fully appreciated and understood by many people, the fact that America's share in the global economy, contrary to all the pessimism that existed exactly a decade ago, has ended up going significantly higher over the last decade.

ZAKARIA: So when you think about, you know, sort of, the -- this decade, what you're saying is that, after the global financial crisis, America, sort of, got its act together, or whatever, and has basically been on a kind of long boom that has really -- you know, it's striking. Most people thought we would decline as a percentage of GDP. We've actually increased over the last 10 years.

SHARMA: Exactly. And I think that there is a further point here, that, as an economic power, America's share in the global economy has now been roughly similar for the last three to four decades. But as a financial superpower, America has never been this powerful as it is now. That is the big distinction. As a financial superpower, America's power today is unrivaled and unparalleled.

The problem with this -- and I think that this is what I'm coming to now -- that this may be as good as it gets, that a lot of people are getting very excited and optimistic about America now, but that -- the time to have been really optimistic and really excited was when everybody was pessimistic a decade ago, or much -- through that period.

But now, amidst this giddiness, I would just point to the fact that American assets today, if you look at the stock market, you look at the bond market, you look at American housing, you put it all together, America has never looked this expansive compared to the rest of the world. And -- when it's come to looking this expansive over the last 100 years, generally it has done more poorly compared to the rest of the world.

Riaz Haq said...

The White House released a report on Tuesday that offers a solemn assessment of American companies prioritizing profits over national security and long-term sustainability. “A focus on maximizing short-term capital returns has led to the private sector’s underinvestment in long-term resilience,” the 250-page report states. The United States has a competitive advantage over China in the production of semiconductor manufacturing equipment (SME), which provides a chokepoint that can limit “advanced semiconductor capabilities in countries of concern.”

The report details the findings and recommendations of the Administration’s 100-day supply chain review required by President Biden’s executive order from February that directed the review of four key industries: semiconductors, large capacity batteries, critical minerals and pharmaceuticals. The report states that the Chinese government’s “massive subsidy campaign [as much as $200 billion over the past eight years] to develop its domestic semiconductor capability” has exploited “gray areas” in international trade rules and avoided World Trade Organization (WTO) oversight. The Chinese government has propped up key tech industries, including semiconductors manufacturing and SME production, through a “novel subsidy strategy” meant to avoid “transparency requirements of the WTO subsidy regime.” Essentially, government subsidies are booked as “investments” to avoid WTO disclosure rules.

This one of many “innovation mercantilist” tactics that Chinese state has practiced for years, according to a recent report and event by the Information Technology & Innovation Foundation which details China’s deleterious impact on competitive international ecosystems for semiconductors, telecommunications equipment, biopharmaceuticals, solar photovoltaics, and high-speed rail. Co-author Stephen Ezell estimates that the US loses out on some 5000 semiconductors patents annually because of this predation.

The Chinese Communist Party has made a concerted effort to dominate the semiconductor market. The Made in China 2025 plan aims to produce 70 percent of China’s chip demand indigenously and pledges as much as $1.4 trillion of investment into China’s semiconductor industries.

Memory chips are the “most mature” of these efforts. Yangtze Memory Technologies (YMTC), which has received $24 billion in state subsidies, has emerged as a “national champion memory chip producer.” A report by James Mulvenon this year identifies ties between YMTC and the People’s Liberation Army.

“It’s not just YMTC,” cautioned Emily de La Bruy√®re, senior fellow at the Foundation for the Defense of Democracies, during a China Tech Threat roundtable forum this week. “Changxin Memory Technologies [CXMT] is equally propped up and potentially equally connected to the [People’s Liberation Army].” The roundtable titled "Let the Chips Fall?" explored the theme of how the next Undersecretary for the Department of Commerce’s Bureau of Industry and Security (BIS) should address semiconductor policy.

The White House report appears to be a de facto roadmap for the next BIS chief and is notable for naming leading Chinese fabs with military connections which have yet to be designated as Military End Users or on the Entity List. In no uncertain words, the bipartisan United State China Commission issued a report earlier this month, Unfinished Business: Export Control and Foreign Investment Reforms which critiqued BIS for failing to issue the lists of foundational and emerging technologies as required by the 2018 Export Reform and Control Act. Such a publication would likely trigger action against the Chinese fabs.

“While the United States no longer leads the world in semiconductor manufacturing capabilities,” it has a competitive advantage over China in semiconductor manufacturing equipment (SME), the White House report adds.

Riaz Haq said...

Countering QUAD: Is There A China-Russia-Pakistan Strategic Nexus In The Making?

By Rushali Saha,Research Associate at the Centre for Airpower Studies, New Delhi, India

Amid India-US bonhomie over QUAD, it’s interesting to watch how China is maintaining its “all-weather” friendship with Pakistan and an “unbreakable” bond with Russia.

Although it is too soon to prove the existence of a Russia-China-Pakistan ‘axis’, the growing strategic convergence between the three is a significant geopolitical development, especially given the possible formation of power blocs given the growing strategic competition between the US and China.

This convergence will most likely play out in the Indo-Pacific—the epicenter of US-China competition. The rechristening of Asia-Pacific as Indo-Pacific is largely a result of growing convergence among the four QUAD countries — India, the United States, Japan, and Australia.

China’s Opposition To QUAD
China has been vocal about its opposition to this “four-side mechanism” as it adheres to the “Cold War mentality.” Both Russia and Pakistan have displayed their ‘pro-China’ tilt on the QUAD, albeit the Russian vision for the region as a whole is more complex.

Russian foreign minister, Sergey Lavrov’s remarks at the Raisina Dialogue held in New Delhi outlined how despite supporting India’s inclusive Indo-Pacific vision, Moscow is hostile towards QUAD, essentially parroting Chinese concerns about containment.

For Pakistan, America’s growing defense relations and professed commitment to bolster India’s capabilities to counter China, have further strained relations between Islamabad and Washington.

Viewing America’s ‘Free and Open Indo-Pacific’ as a threat, Pakistan is seeking deeper security cooperation with Russia and China through joint naval exercises in the Indian Ocean, exchanging naval officials, and deepening military cooperation.

Pakistan’s PNS Zulfikar frigate is all ready to participate in the Arabian Monsoon exercise with Russian ships in the Arabian Sea after the two navies participated in the Pakistan-hosted biannual maritime multinational naval exercise Aman-2021, which included China and 45 other countries.

Beyond symbolism, these strategic moves deserve greater attention as they come at a time when Pakistan and Russia are being pushed closer together over a negotiated political settlement over Afghanistan, while cracks in the Russia-India-China strategic triangle are solidifying.
Russia-Pakistan-China Convergence
Beyond their shared criticism of QUAD, there are other areas where the strategic objectives of the three countries converge. Despite the Chinese projection of the China-Pakistan Economic Corridor (CPEC) as a purely ‘economic’ project, few would deny the strong geopolitical implications it would have—particularly in the Indian Ocean.

Gwadar Port, in Pakistan’s Balochistan province, handed over to the Chinese in 2013 for 40 years provides Beijing direct access to the Indian Ocean through the Arabian Sea. This would extend Chinese power projection well into the Western Indian Ocean, effectively counterbalancing US and Indian naval capabilities.

According to an article published by a leading Russian think tank, the “only explanation” for Russia deferring participation in CPEC is “respect for India’s sensitivities” given New Delhi’s sovereignty concerns over the nature of the project.

However, in view of the growing ties between Islamabad and Kremlin exemplified in Sergei Lavrov’s visit to Pakistan— the first by a Russian foreign minister in 9 years—has raised apprehensions about whether India can continue to deter Russian participation in the project.

Riaz Haq said...

Countering QUAD: Is There A China-Russia-Pakistan Strategic Nexus In The Making?

By Rushali Saha,Research Associate at the Centre for Airpower Studies, New Delhi, India

Russia and China’s increasing presence in the resource-rich Western Indian Ocean can be a game-changer in the ongoing geopolitical contest in the region.

Despite being a late entrant, Russia has significantly stepped up its presence in the region, striking a 25-year agreement with Sudan to establish a naval base in the country which will station four Russian ships and up to 300 personnel, although reports suggest Sudan is currently reviewing the deal.

China, which has already penetrated deep into the Indian Ocean through strengthening maritime ties with East African countries, is independently strengthening maritime cooperation with both Russia and Pakistan.

It is against this backdrop that Iran, Russia, and China held their first-ever joint naval exercise in the Northern Indian Ocean in 2019, where Iran reportedly also invited the Pakistani Navy.

Growing Military Ties
Meanwhile, the latest iteration of bilateral naval exercise between China and Pakistan—Sea Guardians 2020—reflects the growing complexity and expanding the scope of their bilateral maritime partnership.

With Pakistan and Russia committing to increasing the frequency of their joint military drills and maritime exercises to fight terrorism and piracy, the possibility of a Russia-China-Pakistan naval exercise, may not be so remote anymore.

Arguably the strongest glue holding the three countries together is a common aversion to the ‘western construct’ of a ‘rules-based order.’

Against the ‘rules-based order’, China and Russia have been parallelly pushing the narrative on ‘global governance’—premised on the centrality of United Nations—as reflected in the Lavrov-Wang joint statement following the Russian foreign minister’s visit to China earlier this year.

Meanwhile, China and Pakistan have strengthened cooperation in multilateral forums such as the United Nations, evident from the recently released joint statement where the two countries pledged to back each other’s “core interests” and “firmly safeguard multilateralism.”

In October last year, Pakistan—on behalf of 55 countries, which included Russia—made a joint statement at the UN “opposing interference in China’s internal affairs under the pretext of Hong Kong.”

The leaders of the US, Japan, India, and Australia during the first-ever QUAD summit in March this year. (via Twitter)
In the context of the evolving geo-strategic construct of Indo-Pacific and rapidly fluctuating power relations, each country will act in a manner that maximizes its national interest.

The QUAD countries are working together to defend a regional order which was largely constructed by the United States, from rivals, namely China.

China’s careful critique of Western intentions in the Indo-Pacific and representation of QUAD as an “Indo-Pacific NATO” gels well with Russian interests.

The emerging disconnect in US-Pakistan relations has paralleled closer Indo-American ties which have effectively pushed Pakistan closer to China and Russia, binding the three together by shared criticism of what they see as ‘Western hegemony.’

In the current era of strategic uncertainty, the deepening relations between Russia, Pakistan, and China is a major challenge for the QUAD countries, although they are gaining recognition for their agenda from regional and extra-regional actors.

Going forward, one of the first steps QUAD must take is to convince actors, especially Southeast Asian countries, that QUAD is indeed not an ‘Asian NATO.’ To do this, it must begin by robustly defining what it means by a ‘rules-based order’ and clarify that it is not at variance with multilateralism or ASEAN centrality.

Riaz Haq said...

Hailing #Pakistan as #China's true friend and brother, #Chinese FM Wang calls for closer ties. Pakistani FM Shah Mahmood Qureshi says the #Pakistani side is willing to deepen cooperation with China on #CPEC. #CPC100Years #UnitedStates via @cgtnofficial

Chinese State Councilor and Foreign Minister Wang Yi on Wednesday urged closer ties between China and Pakistan amid already close friendship. China and Pakistan need to step up in forging a closer community with a shared future more than ever, he said.

Wang made the remarks via a video link at the opening ceremony of a seminar commemorating the 70th anniversary since China and Pakistan established diplomatic relations.

The Chinese diplomat called for strengthening strategic communication, especially top-level official dialogues for on-time strategic guidance for the development of bilateral ties.

Pakistani Foreign Minister Shah Mahmood Qureshi also addressed the seminar, saying that the Pakistani side is willing to deepen cooperation with China under the Belt and Road Initiative and push the high-quality development of China-Pakistan Economic Corridor (CPEC).

Qureshi also expressed wishes to continue cooperating with China to hold a series of activities marking the 70th anniversary celebrations, calling for the two sides to safeguard regional and world peace and stability.

Riaz Haq said...

Destiny of CPEC depends on regional peace, while potential Afghan civil war serves US interests
By Aasma Wadud
Published: Jul 09, 2021 03:12 PM

War is not an event. It is an economy. Countries like the US have reaped fortunes from it, leaving both destruction and devastation behind. With US troops leaving Afghanistan, the future of the country remains uncertain. It symbolizes that Afghanistan will be abandoned and left alone to an inevitable defeat at the hands of the Taliban. Critics are forecasting a civil war, but there is another perspective that many fail to recognize: The US failed to link its evacuation of troops to sustainable peace, but was it circumstantial or intentional?

With China emerging as an economic superpower, the war economy is now obsolete. China's Belt and Road Initiative (BRI) has given the world generally and the region precisely a new dimension where growth, development, stability, and peace are inevitable for every nation. Afghanistan has been burning like fuel for decades with the past's war economy. Sometimes directly and sometimes through proxies, the past's superpowers have manipulated its geopolitical location, culture, political and social dynamics. Sadly, in the past, war was a commodity that was bought and sold conveniently; Afghan war complemented the needs of those nations with power. With the situation still unfolding, is Afghanistan on the verge of another civil war, or will things change for the better this time?

The last G7 meeting in June 2021 aimed to develop strategies to counter China's BRI, which signifies its importance. The US has invested in India to counter China's influence in the region. But to America's surprise, India has failed to deliver what it was expected to achieve. Because of this, the US needed to find another more spontaneous and swift solution to the loss of its hegemony. With rapid US troop evacuation, Afghan civil war seems to be the apparent outcome, especially for war-dependent economies like the US and its allies. A civil war can serve the US multiple purposes, including some form of instability in the region to counter the BRI. It could sabotage the CPEC and maximize pressure on Pakistan's economy, which is essential to potentially winning the country's most-needed cooperation. Moreover, it could offer the US' struggling economy new support. In the past, time and again, Afghanistan has fallen prey to war economy ventures, but times have changed. With US troops leaving Afghanistan, Indian investment in the country is going to fall off. It has limited alternatives to defending its strategic interests in Afghanistan. Additionally, it fears a new wave of terrorism, and is concerned about the Taliban's growing presence. Finally, as the region stabilizes, Kashmir will see more prominence and limelight.

With the BRI and CPEC, peace has become the hottest commodity in the region. In many ways, the world's future economic growth depends on peace in Afghanistan. It is a fact that Afghanistan's internal dynamics remain the same, where domestic warlords are still significant. The Taliban has evolved from the roadside fighting group to a more flexible and accepting political entity. They are more diverse, with Afghan, Tajik and Uzbek representation. Furthermore, geopolitical transformation will have an impact on the whole situation. In the past, stakeholders were manipulated for war; but this time, "peace" will be the product offered and bought.

The destiny of the BRI and CPEC depend on peace in Afghanistan. China is known for positively contributing to other countries' economies, development, and growth. China will go the extra mile to ensure peace in the region, and will look to ensure a new chapter of growth and prosperity is achieved in Afghanistan.

samir sardana said...

There are some who think PRC wants to rule the world !

They miss the point that, perhaps PRC is not interested,in ruling the world. China has never invaded or conquered any nation,its history.

The Mongol race is merged into,the Northern Chinese - and all the Mongol invasions,are pre-the "merger".

Chinese Emperors have been acutely aware of their capabilities,and have never exported their military might.The only nations invaded by China, were Tibet,India and Afghanistan - and that was 1500-2000 years ago.To say that,Tibet is or was a nation,is also debatable.

Chinese kings exported goods, best practices and technology!


THAT PRC HAS COMPLETE RULE,OVER ITS NEIGHBOURING NATIONS - ON THE PRINCIPLE OF "WHO IS THE BIG DADDY" ? That is the ONLY way, to secure long term peace. Else, nations like INDIA, riding on the shoulders of USA,over step and then fall !

It is evident from the above,also that,PRC CANNOT rule the world -as it needs resources and logistics - which are its weaknesses,and that,the West will always have a bias against PRC and the Chinese people,and that the West will also have the ability to influence world opinion,in several pockets of the world.dindooohindooo

That brings us to an equality of 2 unequal power,id.est., USA and PRC



People misread and misjudge the CCP ECONOMIC PRINCIPLES in their prognosis of doom for the Chinese economy – w.r.t the massive upliftment of 100s of millions out of abject poverty, drudgery and misery.

Take the example of the Chinese “Ghost Towns” and its impact on Bank NPAs

Let us assume that 30 million tons of steel,was used in the so called ghost towns,15 years ago.After 30 years, when these buildings are replaced,this will be steel scrap,and its price will be double the price.of prime steel today.The cement is a dead loss.

But let us dig deeper.Bao Steel may bill steel to a builder,at say,200 usd/ton,but the Marginal cost of that steel,might be 100 usd/ton.This is not enough.The Marginal COST To the steel cluster,in a communist nation would be 15-20 usd per ton,as the coal mines and steel factory,ports,rails,roads etc.,are already in place.The difference between the coal tarriff and the marginal cost of coal is a TRANSFER PAYMENT FROM Bao steel to the coal mine and ports etc (if Bao is buying Coal)

If Coal is selling at 50 usd/ton,the Marginal Cost would be 4-5 USD (being cost of power, diesel and cost of variable labour).

So the MARGINAL COST of the Ghost towns,would be 10-15% of the contracted value of the towns.

At that time,it was the RIGHT decision to set up these “ghost towns”,as the price of steel, coal,cement,paints,labour etc., was much lower,and so was their marginal cost.It made sense to lower the ENTIRE PRODUCTION cost of these plants, by MAXIMISING production, and then using the production,in so called GHOST TOWNS.The benefit of lowering the ENTIRE PRODUCTION cost of the steel,coal,cement plants,would be in the billions of USD.IF THE SAME INFRASTRUCTURE WERE TO BE SET UP AT TODAY’s PRICES OF steel,coal,cement,the cost WOULD BE MUCH HIGHER (far beyond the accrued Chinese Inter bank interest rates over the years)

As far as the banks who lent to the builders of these so called ghost towns – it is important to understand that the Banks have NOT funded the towns.The Banks have funded the input suppliers of these towns,id.est., the steel,cement,paints, furniture and appliances etc factories. In particular,the banks have implicitly funded,the profits of these input suppliers.

Then we calculate the employment provided to a mass of labour in these ghost town projects, and its attendant benefits and the management and technical expertise,developed by the builders, in these ghost town projects.

It must also be noted that the INCREMENTAL PROFITS earned by the steel,cement,paints, furniture and appliances etc. factories,as suppliers to the builders of the ghost towns – would have in the last 15 years,based on a ROCE of 20-30 % ,yielded an aggregate return of 1000-1500% to date (with the attendant revenue streams to the PRC,in the form of direct and indirect taxes,besides other incidental gains)

Hence,for a Communist nation,the Marginal Cost for the Cluster of the “Ghost Towns” (which includes the downstream supply chain benefits and the benefits to the state) is very low and MIGHT even be NEGATIVE,based on the Marginal Cost of the CLUSTER.dindooohindoo

samir sardana said...


If the PRC calculates the incremental gains to the steel,cement,paints,furniture and appliances etc. factories,and their staff,over the past 15 years and the revenue earned by the state from this chain,over the last 15 years,the gains per se, could more than bail out the bank loans,to the so called ghost towns

IT MUST BE NOTED THAT THE LABOUR USED IN THE GHOST TOWNS,AND THE LABOUR USED (IN PART),IN THE INPUT SUPPLIERS, TO THESE GHOST TOWNS – would have had NO OTHER employment,were it NOT for the Ghost town projects. These millions of labour were introduced into the labour pool, ONLY due to these Ghost Towns.Of course,they would have inevitably entered into the labour pool – but only after 5-10 years (on such a large scale).

Hence,there is no loss to the PRC,on account of these so called “ghost towns”.dindooohindoo

Riaz Haq said...

#China wants to buy advanced #chip machine from #Netherlands. #US says NO. It's an ASML machine called an extreme ultraviolet (EUV) lithography system that is essential to making advanced #semiconductor #microprocessors. #silicon #technology via @WSJ

Beijing has been pressuring the Dutch government to allow its companies to buy ASML Holding ASML -2.35% NV’s marquee product: a machine called an extreme ultraviolet lithography system that is essential to making advanced microprocessors.

The one-of-a-kind, 180-ton machines are used by companies including Intel Corp. INTC -1.51% , South Korea’s Samsung Electronics Co. and leading Apple Inc. supplier Taiwan Semiconductor Manufacturing Co. TSM -1.52% to make the chips in everything from cutting-edge smartphones and 5G cellular equipment to computers used for artificial intelligence.

China wants the $150-million machines for domestic chip makers, so smartphone giant Huawei Technologies Co. and other Chinese tech companies can be less reliant on foreign suppliers. But ASML hasn’t sent a single one because the Netherlands—under pressure from the U.S.—is withholding an export license to China.

The Biden administration has asked the government to restrict sales because of national-security concerns, according to U.S. officials. The stance is a holdover from the Trump White House, which first identified the strategic value of the machine and reached out to Dutch officials.

Washington has taken direct aim at Chinese companies like Huawei and has also tried to convince foreign allies to restrict the use of Huawei gear, over spying concerns that Huawei says are unfounded. The pressure aimed at ASML and the Netherlands is different, representing a form of collateral damage in a broader U.S.-China tech Cold War.

ASML Chief Executive Peter Wennink has said that export restrictions could backfire.

“When it comes to targeted, specific, national security issues, export controls are a valid tool,” he said in a statement. “However, as part of a broader national strategy on semiconductor leadership, governments need to think through how these tools, if overused, could slow down innovation in the medium term by reducing R&D.” He said in the short to medium term, it is possible that widespread use of export controls “could reduce the amount of global chip manufacturing capacity, exacerbating supply chain issues.”


That currently isn’t on the table inside the Biden White House, people familiar with the matter say. The U.S. is trying to put together alliances of Western countries to work jointly on export controls, people familiar with the matter said. The move could also have ramifications beyond ASML, further roiling semiconductor supply lines already under strain around the world.

ASML spun out of Dutch conglomerate Royal Philips NV in the 1990s. It is based in bucolic Veldhoven, near the Belgian border. It specializes in photolithography, the process of using light to print on photosensitive surfaces.

Photolithography is key to chip makers, which use light to draw a checkerboard of lines on a silicon wafer. Then they etch away those lines, like a knife carving into wood, but with chemicals. The remaining silicon squares become transistors.

The more transistors on a piece of silicon, the more powerful the chip. One of the best ways to pack more transistors into silicon is to draw thinner lines. That is ASML’s specialty: Its machines print the world’s thinnest lines.

The machines, which require three Boeing 747s to ship, use a laser and mirrors to draw lines five nanometers wide. Within a few years, that is expected to shrink to less than a nanometer wide. By comparison, a strand of human hair is 75,000 nanometers wide.

Riaz Haq said...

#TSMC eyes expansion in #US & #Japan to meet high chip demand. Expansion plans come amid concern over the concentration of chipmaking capability in #Taiwan. #China does not rule out the use of force for Taiwan's most advanced #semiconductor #technology.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW) signalled on Thursday plans to build new factories in the United States and Japan, riding on a pandemic-led surge in demand for chips that power smartphones, laptops and cars.

TSMC, which posted record quarterly sales and forecast higher revenue for the current quarter, said it will expand production capacity in China and does not rule out the possibility of a "second phase" expansion at its $12 billion factory in the U.S. state of Arizona.

The world's largest contract chipmaker and a major Apple Inc (AAPL.O) supplier also said it is currently reviewing a plan to set up a speciality technology wafer fabrication plant, or fab, in Japan.

TSMC's overseas expansion plans come amid concern over the concentration of chipmaking capability in Taiwan, which produces the majority of the world's most advanced chips and is geographically close to political rival China, which does not rule out the use of force to bring the democratic island under its control.

Taiwan and TSMC have also become central in efforts to resolve a pandemic-induced global chip shortage that has forced automakers to cut production and hurt manufacturers of smartphones, laptops and even appliances. read more

"We are expanding our global manufacturing footprint to sustain and enhance our competitive advantages and to better serve our customers in the new geopolitical environment," TSMC chairman Mark Liu told an analyst call.

"While our overseas fabs are not initially able to match the costs of our manufacturing operations in Taiwan, we will work with governments to minimise the cost gap," Liu said.

He did not give details of its plans in America and Japan, adding the company was working to "firm up" wafer prices to reflect cost increases.

Reuters reported in May TSMC was eyeing expansion in Arizona beyond the one currently planned. read more

Liu said TSMC was also planning a capacity expansion in China's Nanjing due to the "urgent need" of clients, using the mature 28 nanometre semiconductor manufacturing technology.

It is scheduled to enter production next year and will eventually reach a production of 40,000 wafers per month by mid-2023, he said.

Revenue for April-June at TSMC , Asia's most valuable manufacturing company, climbed 28% to a record $13.29 billion.

For the quarter ending in September, TSMC forecast revenue of $14.6 billion to $14.9 billion, compared with $12.1 billion in the same period a year earlier.

TSMC said the auto chip shortage will gradually reduce for its customers from this quarter but expects overall semiconductor capacity tightness to extend possibly into next year.

The Taiwanese firm, which also makes chips for Qualcomm Inc (QCOM.O), had previously flagged a $100 billion expansion plan over the next three years, as fifth-generation telecommunications (5G) technology and artificial intelligence applications drive global demand for advanced chips. read more

Riaz Haq said...

Deepglint, a chinese facial-recognition firm, was one of 14 companies slapped with American sanctions on July 9th for alleged links to human-rights abuses in China’s far-western region of Xinjiang. It is also a globally recognised leader in its field and has raised money from Sequoia Capital and other big American investment firms. DeepGlint’s founders, who graduated from Stanford and Brown universities in America, must now discuss with their foreign backers the prospect of decoupling from the Western commercial sphere. Many Chinese companies have been forced to hold similar talks.

China Inc appears to be on the back foot. In America President Joe Biden has picked up where Donald Trump left off, placing restrictions on Chinese companies. Last year Congress passed a bill that may eventually force Chinese firms to delist from American stock exchanges, which would affect nearly $2trn in market value. Huawei, banned from America, has struggled to sell its 5g telecoms kit elsewhere in the West. ByteDance was nearly forced to divest from its prized short-video app, TikTok, over American fears that the Chinese regime could access global users’ personal data. Tencent, another internet giant, is said to be haggling with American regulators worried about its 40% stake in Epic Games, the developer of Fortnite.

Riaz Haq said...

#China emerges as the the biggest global #trading nation, eclipsing the #UnitedStates. How will it affect the #US #currency and #American dominance of the international #financial system? #economy #trade #finance #investment


China Eclipses U.S. as Biggest Trading Nation
Bloomberg News
February 10, 2013

China surpassed the U.S. to become the world’s biggest trading nation last year as measured by the sum of exports and imports of goods, official figures from both countries show.

U.S. exports and imports of goods last year totaled $3.82 trillion, the U.S. Commerce Department said last week. China’s customs administration reported last month that the country’s trade in goods in 2012 amounted to $3.87 trillion.

China’s growing influence in global commerce threatens to disrupt regional trading blocs as it becomes the most important commercial partner for some countries. Germany may export twice as much to China by the end of the decade as it does to France, estimated Goldman Sachs Group Inc.’s Jim O’Neill.

“For so many countries around the world, China is becoming rapidly the most important bilateral trade partner,” O’Neill, chairman of Goldman Sachs’s asset management division and the economist who bound Brazil to Russia, India and China to form the BRIC investing strategy, said in a telephone interview. “At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe.”

U.S. Leadership
When taking into account services, U.S. total trade amounted to $4.93 trillion in 2012, according to the U.S. Bureau of Economic Analysis. The U.S. recorded a surplus in services of $195.3 billion last year and a goods deficit of more than $700 billion, according to BEA figures released Feb. 8. China’s 2012 trade surplus, measured in goods, totaled $231.1 billion.

The U.S. economy is also double the size of China’s, according to the World Bank. In 2011, the U.S. gross domestic product reached $15 trillion while China’s totaled $7.3 trillion. China’s National Bureau of Statistics reported Jan. 18 that the country’s nominal gross domestic product in 2012 totaled 51.93 trillion yuan ($8.3 trillion).

“It is remarkable that an economy that is only a fraction of the size of the U.S. economy has a larger trading volume,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said in an e-mail. The increase isn’t all the result of an undervalued yuan fueling an export boom, as Chinese imports have grown more rapidly than exports since 2007, he said.

Riaz Haq said...

Opinion: The United States and China are locked in a Cold Peace
By Fareed Zakaria

The Soviet Union barely existed on the economic map of the free world. It presided over a tightly controlled economic bloc of communist countries that had few connections — in trade or travel — with the rest of the planet. Mostly, its economy was about resources — oil, gas, nickel, copper, etc. China, by contrast, is deeply integrated into the world economy. It is now the world’s leading trading nation in goods. Twenty years ago, the vast majority of countries traded more goods with the United States than with China. Today, it has flipped. Last year, China replaced the United States as the European Union’s largest trading partner in goods.

China needs U.S. consumers for its economic growth. But conversely, many of the United States’ largest companies — from General Motors to Apple to Nike — need the Chinese market. The Walmart effect — the availability of low-priced goods of every kind to Americans — has been closely tied to sourcing from China. Even when you look at something such as the United States’ expanding green economy, you find the shadow of China behind it. Those solar panels you see everywhere have become so affordable and thus ubiquitous because many are made in China. And then there is the roughly $1 trillion worth of American debt that China holds.

The United States will need a strategy that mirrors the complexity of this relationship, one in which China is part competitor, part customer, part adversary. Some of this the Biden administration has done very well, bringing America’s allies together in a more united front against China, such as for its human rights abuses. But Biden is also confronting the reality that the United States’ allies have close economic ties with China. (In Asia, most countries have China as their largest trading partner.) They would like to have both strong trading relations with China and strong geopolitical ties with the United States. Forcing them to choose might create more problems than it solves.

Adding even more nuance, China is strong but it is not taking over the world. It faces substantial challenges ahead. It is graying quickly because of the legacy of Beijing’s one-child policy. It has still not shown that it can avoid the “middle income trap” faced by rising economies that aspire to join the ranks of rich ones. Chinese President Xi Jinping is nurturing the state sector and unleashing regulators on private companies. And China’s new, assertive foreign policy has caused a backlash from its biggest neighbors, from India to Australia to Japan. Last week, the Philippines renewed a defense agreement with the United States that it had long announced it was planning to end.

Can Washington embrace the complexity of this challenge? It is facing an economic powerhouse that, unlike Germany and Japan, is not dependent on the United States for its security. It faces a new great power that is not a democracy and has different values and beliefs, and yet has not occupied and controlled countries as Stalin’s Russia did during the 1940s (which is what triggered the Cold War).

And this is all happening in a world in which international trade has rebounded to pre-pandemic levels. It’s not a new Cold War but something much more complicated: a Cold Peace.

Riaz Haq said...

Here’s some bad news for military analysts who do not tire of cheering America’s ‘defeat’ in Afghanistan: the US has left Afghanistan; it retains its position as a hegemon by Ejaz Haider

To sum up the above, the US military remains the most powerful armed force in the world, singly and in tandem with its allies. It can win wars but not conflicts, especially in areas where it is operating among foreign populations. The latter is also true of other militaries; two, use of force has many frameworks and success and failure would depend on how force is being applied, against whom and to what end. For instance, Iran uses proxies across the greater Middle East to neutralise its asymmetrical disadvantages and its relative military weaknesses against its adversaries. Israel uses a mix of strategies to retain its dominance. The IDF, one of the most formidable armed forces, had a hard time dealing with Hezbollah in the 2006 Lebanon War. But it remains the dominant military force in operations which do not require getting bogged down on the ground against elusive adversaries.


In case the argument is still unclear, let me assume a scenario for further clarification: in the event the Taliban take control of Kabul and with that a large part of Afghanistan, and in the event that they embark on a policy that the US considers inimical to its interests, the US has the capabilities to destroy Taliban forces. How? One, as noted earlier, the US can win a war against most adversaries very easily; two, the Taliban forces and assets — elusive as an insurgent force — will be over-the-ground as an established government. It’s difficult to operate against elusive forces; it’s easy to destroy concentrated targets.

Let me now come to another issue with reference to victory and defeat, which I flagged above. The US, a western hemisphere superpower, came to these shores to achieve its geopolitical objectives. It could achieve them both in ‘victory’ and ‘defeat’. What do I mean by that? In victory, i.e., in the event it could stabilise Afghanistan and Iraq, it would have two new allies; Iraqi stabilisation could also yield positive results for it in the Middle East. That did not happen and yet it now reaps the dividends of what many consider its ‘defeat’. How? It has cut its losses and gotten out, leaving regional countries to deal with Afghanistan’s likely spillover. Two of those countries are also its geopolitical competitors: China and Russia. Russia is already doing military drills with Uzbek forces as part of CSTO (Collective Security Treaty Organisation); China is bracing up for any spillover effects in Xinjiang.

In the Middle East, if Iraq, Syria and Libya cannot be stable US allies along the lines, for instance, of the Southeast Asian states, the US and Israel can reap the benefits of continuing instability in the region. A fractured region is the second-best option if you can’t get a stable, peaceful, US-friendly region.

So, here’s some bad news for military analysts who do not tire of cheering America’s ‘defeat’ in Afghanistan: the US has left Afghanistan; it retains its position as a hegemon; it remains a nearly USD 23 trillion economy. Meanwhile, in this hour of ‘great victory’, Afghans are killing Afghans and by the looks of it, that’s not going to end anytime soon.

Hamid Dabashi, the celebrated Iranian-American author and academic recently wrote an article, “Why the US war in Afghanistan was a resounding success.” While I do not agree with many of his observations, he is spot-on when he says, “There is nothing sillier than the cliched assumption of Afghanistan as the “graveyard of empires”. The US empire did not die in Afghanistan, nor did Russian imperial designs before it. Quite the contrary: both the US and Russia are robust military and imperial machines at work from Central Asia to the Indian Ocean and beyond.”

Afghanistan is only the graveyard of Afghans. That’s called deep tragedy, not victory.

Ahmed said...

Dear Sir Riaz

Thank you for sharing this useful and informative post, yes it is true that China has become very successful as an economy but Sir, do you know that the labor in China doesn't get salary(pay) for working in any factory or industry. They only get food and water to drink and this is how they live their life in China. This is the main reason why the labor is cheap in China because the government of China doesn't have to pay them salaries.

As the labor in China is cheaper ,this is why the cost of production in China reduces to great extent. And this is why the products of China which it exports to other countries are much cheaper and this is why Chinese products are mostly sold in developing countries like Pakistan and India as the people of Pakistan and India mostly prefer cost over quality. The people of India and Pakistan prefer cheap products more than the quality products.
This is one of the reasons why China is more successful, also Sir the population of India and Pakistan is very huge overall and this allows Chinese products to be more consumed in these countries.

Mostly the labor in China doesn't get its rights and this is why as far as I remember WTO(World Trade Organization) was not willing to make China as its member.

Riaz Haq said...

ASEAN needs more Belt and Road money, say ministers - Nikkei Asia

Meeting online at a Belt and Road Summit, ASEAN ministers said the region has benefited from the infrastructure and digital connectivity already brought about by BRI, but new initiatives are needed to create opportunities amid pandemic-induced uncertainties.

"I am of the view that there are many tangible aspects that could be derived from the multinational partnership and cooperation under the BRI," said Sansern Samalap, Thailand's vice minister for commerce.

Sansern gave the example of the BRI flagship $5.75 billion China-Thailand high-speed railway project that will promote investments in the Greater Mekong Subregion, which includes Cambodia and Laos as part of the China-Indochina economic corridor.

Finally signed last October after numerous delays over terms and conditions, the initial 253 km line will connect Bangkok to Nakhon Ratchasima, the gateway to northeastern Thailand. Phase one of construction has already begun, and is slated for completion in late 2026. The final 873 km line will carry on up to Vientiane, the Laotian capital, and from there continue north to Kunming in China's Yunnan Province.

"Investors can grab this business opportunity and use Thailand as the gateway into the subregion and ASEAN," said Sansern.

Top Chinese officials participated in the summit, including Gao Yunlong, vice chairman of the national committee of the Chinese People's Political Consultative Conference, and Commerce Minister Wang Wentao.

The BRI was unveiled by President Xi Jinping in 2013. In 2020, China signed BRI cooperation agreements with nearly 140 countries to promote connectivity between Asia, Europe and Africa, mainly through infrastructure projects.

Tan See Leng, Singapore's minister for manpower, told the summit that accelerating ASEAN development plans has become more important if countries are to overcome the current economic slowdown,

"In such times, the BRI plays an even more important role in strengthening regional and multilateral cooperation by promoting connectivity in infrastructure, in finance and in trade," said Tan.

The Asian Development Bank recently downgraded its growth forecast for Asia to 7.2% from the 7.3% projected in April, citing the recent rapid spread of COVID-19 and low vaccination levels in Asian countries.

Tan said Singapore will partner China on some investments in BRI projects. Companies from the two countries are collaborating in various sectors, including logistics, e-commerce, infrastructure, finance and legal services.

Jerry Sambuaga, Indonesia's vice minister for trade, said BRI projects have boosted connectivity and created business opportunities.

"We must maintain this mutually beneficial partnership amidst uncertain global challenges," Sambuaga said. He called for more collaboration on Indonesian tourism projects that benefit local communities, and for the BRI to complement the Regional Comprehensive Economic Cooperation agreement.

RCEP, a 15-country multilateral free trade deal signed in 2020 by ASEAN along with Australia, China, Japan, New Zealand and South Korea, is due to take effect on Jan. 1, 2022. Some analysts expect a delay, however, as not all governments have ratified the agreement in their national legislatures.

Singapore's Tan said today that the city state expected the "timely" implementation of RCEP on schedule.

"We look forward to the implementation of the RCEP in order to realize the benefit to businesses [and] to people while contributing to Asia's economy recovery and strengthening of confidence in the longer-term economic prospects of Asia," he said.

Riaz Haq said...

#India, #US to raise #military interoperability, agree to establish the Indo-US #Industrial #Security Joint Working Group. #Russia #China #Pakistan @deccanherald

(Gen Bipin) Rawat and (General) Milley discussed a range of issues, including ways to ensure regional security and their respective roles as principal military advisors to civilian leadership. They also agreed to continue cooperation in training exercises and creating opportunities to increase interoperability between the two militaries, Col. Dave Butler, a spokesperson of the US Joint Chiefs of Staff, said.

(India-US Joint) working group to expeditiously align policies and procedures allowing defence industries of the two nations to collaborate on cutting edge military technologies.

Riaz Haq said...

China tests new space capability with hypersonic missile
Launch in August of nuclear-capable rocket that circled the globe took US intelligence by surprise

Demetri Sevastopulo in Washington and Kathrin Hille in Taipei OCTOBER 16 2021

China tested a nuclear-capable hypersonic missile in August that circled the globe before speeding towards its target, demonstrating an advanced space capability that caught US intelligence by surprise.

Five people familiar with the test said the Chinese military launched a rocket that carried a hypersonic glide vehicle which flew through low-orbit space before cruising down towards its target.

The missile missed its target by about two-dozen miles, according to three people briefed on the intelligence. But two said the test showed that China had made astounding progress on hypersonic weapons and was far more advanced than US officials realised.

The test has raised new questions about why the US often underestimated China’s military modernisation.

“We have no idea how they did this,” said a fourth person.

The US, Russia and China are all developing hypersonic weapons, including glide vehicles that are launched into space on a rocket but orbit the earth under their own momentum. They fly at five times the speed of sound, slower than a ballistic missile. But they do not follow the fixed parabolic trajectory of a ballistic missile and are manoeuvrable, making them harder to track.

Taylor Fravel, an expert on Chinese nuclear weapons policy who was unaware of the test, said a hypersonic glide vehicle armed with a nuclear warhead could help China “negate” US missile defence systems which are designed to destroy incoming ballistic missiles.

“Hypersonic glide vehicles . . . fly at lower trajectories and can manoeuvre in flight, which makes them hard to track and destroy,” said Fravel, a professor at the Massachusetts Institute of Technology.

Fravel added that it would be “destabilising” if China fully developed and deployed such a weapon, but he cautioned that a test did not necessarily mean that Beijing would deploy the capability.

Mounting concern about China’s nuclear capabilities comes as Beijing continues to build up its conventional military forces and engages in increasingly assertive military activity near Taiwan.

Tensions between the US and China have risen as the Biden administration has taken a tough tack on Beijing, which has accused Washington of being overly hostile.

Michael Gallagher, a Republican member of the House armed services committee, said the test should “serve as a call to action”.

“The People’s Liberation Army now has an increasingly credible capability to undermine our missile defences and threaten the American homeland with both conventional and nuclear strikes,” said Gallagher. “Even more disturbing is the fact that American technology has contributed to the PLA’s hypersonic missile programme.”

US military officials in recent months have warned about China’s growing nuclear capabilities, particularly after the release of satellite imagery that showed it was building more than 200 intercontinental missile silos. China is not bound by any arms-control deals and has been unwilling to engage the US in talks about its nuclear arsenal and policy.