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 

Fortune Global 500: 

Until 2019, the United States had more Fortune 500 companies than any other country. In 2020, China surpassed the US.  China had 124 companies, higher than 121 US companies. This is indeed very impressive given that there were only ten Fortune 500 companies in China in 2000. In 2021, the number of top world companies ranked by revenue grew by eleven in China, while in the U.S. there was only one company more than in 2020.

Locations of Global 500 Companies. Source: Fortune Magazine

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 Bruyère, 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.

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...

#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.

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...

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.

Riaz Haq said...

What the Thucydides Trap gets wrong about China

The alarming possibility of a major conflict between the US and China has been framed as a likely consequence of a pattern of great power behaviour first identified by the fifth-century BCE historian Thucydides. In his study of the Peloponnesian War, the Greek wrote: “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable.” This argument is now most associated with the Harvard academic Graham Allison, who claims to have identified 16 instances in which a dominant power has sought to suppress an emerging rival before they became too strong. He notes, disconcertingly, that 12 of these ended in war.

Allison first presented his thesis of the “Thucydides Trap” in the Atlantic in 2015, and developed it in a book, Destined for War, in 2017. Since then, Allison’s argument that the relationship between the US and China is growing increasingly volatile has gained even more credibility with tensions over trade, the South China Sea and Taiwan.

But Allison’s notion of the Thucydides Trap – the tendency towards war when a rising power threatens to displace an existing one – fails to address the risks involved in conflict and the reasons why wars occur. The story told by Thucydides is much more complicated than the “Trap” suggests. The notion of inevitable conflict between Athens and Sparta elides the fact that the Athenian leader Pericles made poor strategic calls. Different decisions would have avoided war.


The “Trap” argument is also undermined when you consider the view held by many experts that China’s power may have already peaked. The nation is facing a series of system problems that may halt its rise, including an unbalanced economy, an ageing population, environmental degradation and political dysfunction resulting from President Xi Jinping’s authoritarian turn. Indeed, recent war scares start from the assumption that the leadership in Beijing might want to invade Taiwan before China’s power wanes.

The risk of war in the Indo-Pacific region cannot usefully be understood as the result of an upstart power challenging the established global hegemon for supremacy. Issues of interest and alliances are as important as power balances, and all need to be watched carefully if conflict between the world’s preponderant forces are to be addressed and, hopefully, avoided.

Riaz Haq said...

#China celebrates record #Winter #Olympics #medals haul, beating #US. Traditionally much stronger in the Summer Games, China earned an unprecedented nine gold medals during its home-hosted winter edition after the state ploughed resources into training.

China celebrated a record gold medal haul as the Beijing Winter Olympics concluded Sunday, narrowly beating out chief geopolitical rival the United States to rank third in the medal count.

Traditionally much stronger in the Summer Games, China earned an unprecedented nine gold medals during its home-hosted winter edition after the state ploughed resources into training.

By Sunday afternoon, at least four trending hashtags related to China's best haul had received almost 200 million views on the Twitter-like platform Weibo.

Much of that commentary was as pleased about beating the United States by one place as it was China's best winter finish.

"Last year the US surpassed China by one gold medal in the Summer Olympics, this year China surpassed the US by one medal," read one comment liked more than 2,800 times.

The Chinese team won 15 medals in total -- nine golds, four silvers and two bronzes.

Figure skating duo Han Cong and Sui Wenjing secured the country's last Olympic gold -- and broke a previous world record -- in an emotional pairs event on Saturday evening.

Winter powerhouse Norway was in first place with 16 gold medals and a total of 37. Runner-up Germany received 12 golds and 27 medals in total.

Beijing sees the Winter Games as a propaganda showpiece with which to burnish its international image and project soft power abroad.

But the event has been clouded by political controversies.

The United States led a diplomatic boycott of the Games over China's human rights record, which was joined by multiple Western countries.

The Games also saw a doping scandal involving a teenage Russian athlete and growing fears of a Russian invasion of Ukraine.

However, Chinese medal-winners have been lionised as national heroes by state media, while Chinese social media has been flooded with patriotic comments.

"I am so proud of the Chinese team's achievements," 32-year-old tech worker Min Rui told AFP on Sunday as she shopped with two girlfriends near an Olympic countdown clock in one of Beijing's central districts.

"The winter sports industry is still in its infancy and many athletes were chosen from other sporting disciplines. So coming third in the medal tally, ahead of countries like the US and Canada, is a real achievement."

Beijing's investment in developing winter sports has nurtured a new generation of breakout stars.

Among them are teenage snowboarding champion Su Yiming and Chinese-American skier Eileen Gu, who is the most decorated Chinese athlete with two golds and one silver medal.

Gu switched to compete for China over the United States in 2019.

China won one gold and a total of nine medals at the 2018 Pyeongchang Winter Olympics.

It had never won more than three gold medals in Winter Games history.

Riaz Haq said...

How the West Can Win a Global Power Struggle
In an economic Cold War pitting China and Russia against the U.S. and its allies, one side holds most of the advantages. It just has to use them.

Of course the East plays a central role in the global economy. As recent market turmoil illustrates, Russia is a key supplier of not just oil and gas but metals such as palladium, used in catalytic converters, and nickel. China dominates manufacturing of countless goods whose value became abundantly clear during the pandemic, when demand for some, such as protective personal equipment, skyrocketed.

To a great extent these strengths reflect Russia’s comparative advantage in geology and China’s in factory labor. The West’s comparative advantage is in knowledge. That’s why Russia and China court Western investment. For example, to develop a complex liquefied natural gas (LNG) project in the Arctic, Russia relied on Norwegian, French and Italian contractors for essential expertise, research firm Rystad Energy notes.

Catching up with the West is no easy task, as semiconductors illustrate. Western companies dominate all the key steps in this critical and highly complex industry, from chip design (led by U.S.-based Nvidia, Intel, Qualcomm and AMD and Britain’s ARM) to the fabrication of advanced chips (led by Intel, Taiwan’s TSMC and South Korea’s Samsung ) and the sophisticated machines that etch chip designs onto wafers (produced by Applied Materials and Lam Research in the U.S., the Netherlands’ ASML Holding and Japan’s Tokyo Electron ).

Russia and China have made efforts to reduce this dependence. Russia developed locally designed microprocessors called Elbrus and Baikal to run data centers, cybersecurity operations and other applications. Though neither has achieved significant market share, they “represent the pinnacle of local design capability,” said Kostas Tigkos, principal at Jane’s, a defense intelligence provider. Russia hoped that they would eventually displace chips made by Intel and AMD, he said. “This would not only have been the foundation for diversifying their installed base, but a stepping stone for exports of those processors to other friendly nations.” But without manufacturers like TSMC to make the chips, Russia is facing “the complete disintegration of their aspirations to develop their own industry.”

China has a much bigger semiconductor industry than Russia, and its partly state-owned national champion, Semiconductor Manufacturing International Co. (SMIC), could in theory make Russia’s chips, but that would take at least a year, Mr. Tigkos said. Moreover, its efforts to catch up to its Taiwanese competitor have been set back by sanctions. In 2020 the U.S. required companies using American technology to obtain a license to sell to SMIC. This effectively limited its ability to acquire advanced equipment from Netherlands’ ASML, which is critical for “any country that wants to have a competitive semiconductor industry,” Mr. Tigkos said.

Why does all this matter to the outcome of the geopolitical contest? Over time economic weight, strength and vitality are what allow countries to sustain military capability, achieve and maintain technological superiority, and remain attractive partners for other countries.

Yet GDP does not automatically equate to strategic influence. To win a Cold War, it’s not enough for the West to hold the best economic cards, it has to know how to play them. Economic statecraft, as this is called, does not come naturally to the West: Its institutions are built on the assumption that companies are private enterprises, not instruments of the state. They do business wherever it’s profitable, regardless of their home countries’ strategic interests.

Riaz Haq said...

Chip consortium ISMC (joint venture between #AbuDhabi-based Next Orbit Ventures and #Israel's Tower Semiconductor) to set up $3 billion plant in India's Karnataka. It will be #India's first #Semiconductor #fabrication plant. #technology via @Yahoo

ISMC and Indian conglomerate Vedanta Ltd have applied for Prime Minister Narendra Modi's $10 billion incentive plan to push companies to set up semiconductor and display operations in India, the government's next big bet on electronics manufacturing.


BENGALURU (Reuters) - International semiconductor consortium ISMC will invest $3 billion in India's southern Karnataka state to set up a chip-making plant, the state government said on Sunday.

ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel's Tower Semiconductor. U.S. chip giant Intel Corp has announced plans to acquire Tower.

India’s first semiconductor fabrication unit is expected to generate more than 1,500 direct jobs and 10,000 indirect jobs, the state's investment promotion division said in a tweet.

ISMC and Indian conglomerate Vedanta Ltd have applied for Prime Minister Narendra Modi's $10 billion incentive plan to push companies to set up semiconductor and display operations in India, the government's next big bet on electronics manufacturing.

Munsif Vengattil
Sun, May 1, 2022, 1:02 AM·1 min read

A silicone semiconductor is seen at the offices of Tower Semiconductor in northern Israel
By Munsif Vengattil

BENGALURU (Reuters) - International semiconductor consortium ISMC will invest $3 billion in India's southern Karnataka state to set up a chip-making plant, the state government said on Sunday.

ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel's Tower Semiconductor. U.S. chip giant Intel Corp has announced plans to acquire Tower.

India’s first semiconductor fabrication unit is expected to generate more than 1,500 direct jobs and 10,000 indirect jobs, the state's investment promotion division said in a tweet.

ISMC and Indian conglomerate Vedanta Ltd have applied for Prime Minister Narendra Modi's $10 billion incentive plan to push companies to set up semiconductor and display operations in India, the government's next big bet on electronics manufacturing.


Vedanta told Reuters on Saturday it was in "advanced talks" with Gujarat and Maharashtra in west India and Telangana in the south to choose a site by mid-May. It has a planned investment outlay of $20 billion for its semiconductor and display push.

Modi and his IT ministers outlined plans on Friday for investment incentives in the sector, saying they want India to become a key player in a global chip market dominated by manufacturers in Taiwan and a few other countries.

India's semiconductor market is forecast to grow to $63 billion by 2026 from $15 billion in 2020, the government says.

(Reporting by Munsif Vengattil and Aditya Kalra in New Delhi; Editing by Clarence Fernandez and William Mallard)

Riaz Haq said...

60% o Fortune Global 500 companies are in 3 countries:

Greater China 145

United States 124

Europe 127

Japan 47

This map-and-chart package captures one of the top business stories of the past two decades: China’s rise in the global corporate hierarchy. Greater China (including Taiwan) surpassed the U.S. for the largest number of Global 500 companies for the first time in fiscal 2018; it widened its lead in 2020, when COVID shut down much of the world and China kept humming. One striking subplot in this story is the degree of state involvement in China’s big businesses: 87 of the companies from mainland China on this year’s list are majority or entirely government-owned. (In the U.S., just three fit that description: the Postal Service and real estate finance agencies Fannie Mae and Freddie Mac.) Can state-owned companies act nimbly and stay competitive in a fragmenting global economy? That’s the next chapter.

Riaz Haq said...

#US Orders #Nvidia to Halt Sales of Top #AI Chips to #China. Nvidea says ban on its A100 & H100 chips designed to speed up machine learning could interfere with completion of developing the H100, its flagship chip it announced this year. #geopolitics

By Stephen Nellis and Jane Lanhee Lee

(Reuters) -Chip designer Nvidia Corp said on Wednesday that U.S. officials told it to stop exporting two top computing chips for artificial intelligence work to China, a move that could cripple Chinese firms' ability to carry out advanced work like image recognition and hamper Nvidia's business in the country.

The announcement signals a major escalation of the U.S. crackdown on China's technological capabilities as tensions bubble over the fate of Taiwan, where chips for Nvidia and almost every other major chip firm are manufactured.

Nvidia shares fell 6.6% after hours. The company said the ban, which affects its A100 and H100 chips designed to speed up machine learning tasks, could interfere with completion of developing the H100, the flagship chip it announced this year.

Shares of rival Advanced Micro Devices Inc fell 3.7% after hours. An AMD spokesman told Reuters it had received new license requirements that will stop its MI250 artificial intelligence chips from being exported to China but it believes its MI100 chips will not be affected. AMD said it does not believe the new rules will have a material impact on its business.

Nvidia said U.S. officials told it the new rule "will address the risk that products may be used in, or diverted to, a 'military end use' or 'military end user' in China."

The U.S. Department of Commerce would not say what new criteria it has laid out for AI chips that can no longer be shipped to China but said it is reviewing its China-related policies and practices to "keep advanced technologies out of the wrong hands.

"While we are not in a position to outline specific policy changes at this time, we are taking a comprehensive approach to implement additional actions necessary related to technologies, end-uses, and end-users to protect U.S. national security and foreign policy interests," a spokesperson told Reuters.

The Chinese foreign ministry responded on Thursday by accusing the United States of attempting to impose a "tech blockade" on China, while its commerce ministry said such actions would undermine the stability of global supply chains.

"The U.S. continues to abuse export control measures to restrict exports of semiconductor-related items to China, which China firmly opposes," commerce ministry spokesperson Shu Jieting said at a news conference.

This is not the first time the U.S. has moved to choke off Chinese firms' supply of chips. In 2020, former president Donald Trump's administration banned suppliers from selling chips made using U.S. technology to tech giant Huawei without a special license.

Without American chips from companies like Nvidia and AMD, Chinese organizations will be unable to cost-effectively carry out the kind of advanced computing used for image and speech recognition, among many other tasks.

Image recognition and natural language processing are common in consumer applications like smartphones that can answer queries and tag photos. They also have military uses such as scouring satellite imagery for weapons or bases and filtering digital communications for intelligence-gathering purposes.

Nvidia said it had booked $400 million in sales of the affected chips this quarter to China that could be lost if firms decide not to buy alternative Nvidia products. It said it plans to apply for exemptions to the rule.

Stacy Rasgon, a financial analyst with Bernstein, said the disclosure signaled that about 10% of Nvidia's data center sales were coming from China and that the hit to sales was likely "manageable" for Nvidia.

Riaz Haq said...

China's dominance of manufacturing is growing, not shrinking
Country gaining market share in both low- and high-tech sectors

William Bratton is author of "China's Rise, Asia's Decline." He was previously head of Asia-Pacific equity research at HSBC.

When it comes to discussions about China's manufacturing capabilities, there is an all-too-frequent disconnect between rhetoric and reality.

On the one hand, it is widely understood that Chinese producers are losing relative competitiveness. Higher labor costs, bitter trade frictions, rising geopolitical tensions and the domestic pursuit of zero-COVID are all encouraging exporters to leave the country.

China, it is thus argued, has passed "peak manufacturing" and its status as the world's manufacturer stands to be superseded by other countries in the region. By extension, this will materially impact China's economic trajectory and the region's evolving geopolitical balances.

On the other hand, there has been a lack of substantive evidence offered to support the above argument. Although anecdotes abound about certain companies relocating production out of China, the data suggests that such moves are not at the scale necessary to reverse the upward momentum of the country's manufacturing base, nor its international competitiveness.

The most obvious evidence of this is in trade flows.

It is not just that Chinese exports have remained remarkably robust despite COVID-related lockdowns. More than that, the latest numbers from the U.N. Conference on Trade and Development imply that Chinese producers have become more competitive in recent years, not less.

China's manufactured exports, for example, have been growing significantly faster than those of Germany, the U.S., Japan or South Korea. As a result, its share of global manufactured exports by value surged to a new high of 21% last year, compared to just 17% in 2017. The country is now a more important international supplier than Germany, the U.S. and Japan combined.

Furthermore, contrary to the view that supply chains are reducing their exposure to China, Chinese manufacturers have consolidated their primacy across the vast majority of sectors over recent years. In fact, what is particularly remarkable about China's evolving trade structure is that it has been able to simultaneously gain export share in both low- and high-technology industries, including those as eclectic as leather products, truck trailers and optical instruments.

Such gains are hardly indicative of an industrial base under stress. They instead highlight the hyper-competitiveness of China's producers, who increasingly dominate the East and Southeast Asian manufacturing landscape.

For all the chatter about companies leaving China and the changing geographies of supply chains, the reality is that it generated nearly half of the region's manufactured exports in 2021, compared to less than a third 15 years ago.

This competitiveness is derived from the complex and self-reinforcing interaction of multiple factors, many of which are a function of China's size. This allows the country to support far higher levels of domestic competition, innovation and specialization than its neighbors, and results in greater efficiencies and lower production costs, which regional rivals will always struggle to replicate. These scale benefits are subsequently magnified through aggressive industrial development policies that have no obvious precedent in terms of scope or ambition.

So China's manufacturing advantages must be viewed holistically, especially as it can be highly misleading, however tempting, to draw conclusions based on the trends of any specific factor.

Riaz Haq said...

China's dominance of manufacturing is growing, not shrinking
Country gaining market share in both low- and high-tech sectors

William Bratton is author of "China's Rise, Asia's Decline." He was previously head of Asia-Pacific equity research at HSBC.

The country's rapidly rising wages, for example, attract much attention. But it would be a mistake to assume that this signals the loss of competitiveness in more labor-intensive industries.

Rather, it reflects dramatic improvements in productivity and a broader structural shift into higher technology sectors. Furthermore, the use of national averages masks the diversity of China's labor force, with a substantial pool still on relatively low wages.

This is seen in the irrefutable fact that the country's manufacturers are still gaining export share across low-technology and labor-intensive industries, including textiles. In other words, their innate advantages are so substantial and so overwhelming that higher labor costs by themselves have no material impact on their competitiveness.

As such, despite all the frequently cited anecdotes, there is no real evidence that the factors underpinning China's competitiveness are being reversed. Rather, Asia's manufacturing industries will continue to concentrate in China, further entrenching its status as the core of the region's economic system.

This is the challenge for the rest of the region. No matter how hard they try, few countries, if any, will be able to replicate or match China's natural advantages. And this will have profound longer-term economic and geopolitical consequences.

Against the onslaught of highly competitive Chinese products, emerging economies will struggle to develop the manufacturing sectors they need to achieve and sustain productivity-led growth over the long-term.

But even more advanced nations are not immune from the pressures created by China, with the hollowing-out of their industrial structures a very real danger. The displacement of Japanese and South Korean manufacturers from the global telecommunications equipment and shipbuilding markets demonstrates just how quickly China can engage with its neighbors at their own games -- and win.

So for all the suggestions that China's grip on manufacturing is weakening, the reality could not be more different. It is not the Chinese producers that are losing influence, but their rivals across the region.

In fact, the natural forces driving the country's competitive advantages are now both so substantial and entrenched that the rest of Asia is seemingly engaged in an unfair trade fight -- and one it is unlikely to win. The region's slide toward a clearly defined economic core-periphery structure -- with China dominating and the rest being disadvantaged -- now looks inevitable.

In turn, this is creating dependencies which will prove evermore difficult to disentangle, no matter how strong the apparent political commitment in some countries to do so.

This is seen in how recent attempts to diversify imports away from Chinese producers have been constrained by the lack of credible alternative suppliers. It is noticeable that Australia and India, countries positioning themselves as regional rivals to China, have increased -- not reduced -- their reliance on Chinese manufactured imports over the last three years.

It is true that this manufacturing mastery may not have been developed as a deliberate geopolitical tool. But in the same way the U.S. was able to use its post-World War II industrial leadership to advance its own interests, the reliance on Chinese products will naturally give Beijing unrivaled power and influence within Asia. As such, China's future economic and political dominance of the Asian regional economy is set to be underpinned by its vibrant, dynamic and hypercompetitive manufacturing industries, whatever the country's doomsayers may claim.

Riaz Haq said...

Opinion The Checkup With Dr. Wen: What does it mean to hold China ‘accountable’ for covid?

By Leana S. Wen

whether it (COVID) is caused by laboratory accidents or animal-to-human spillover. ...

Not everyone agrees. House Foreign Affairs Committee Chair Michael McCaul (R-Tex.) told CNN on Monday that “some people need to be held accountable, whether that be in a civil context or criminal liability context.” He mentioned the possibility of sanctions against China as well as reparations “for killing millions of people across the world.”

These comments suggest an intentionality behind the spread of covid-19 that neither scientists nor intelligence experts have found any evidence for. To the contrary, as much as U.S. intelligence agencies disagree about the coronavirus’s origins, they agree on one aspect: This was not intentional. It was not an act of bioterrorism. No one intended to weaponize a virus to cause a global pandemic.

This fact bears repeating, and I hope McCaul and others who have been calling for “accountability” will be clear with Americans to distinguish between an intentional act and their preferred theory of a laboratory accident.

And they should be reminded that such a mishap could have happened in the United States, too.

In 2014, when the Food and Drug Administration conducted an office cleanup to move to a new location, it found hundreds of vials of virus samples in an unsecured storage room. Six of them turned out to be vials of the deadly smallpox virus. Astonishingly, no one knew they were there. It’s possible the vials had been there since the 1950s but were forgotten in subsequent inventories.

Also in 2014, some 75 staff members at the Centers for Disease Control and Prevention were exposed to anthrax after scientists failed to inactivate the anthrax bacterium before sending it to three labs that weren’t prepared to handle it. In a separate incident, the CDC inadvertently sent what it thought were harmless strains of flu but actually was the H5N1 avian flu.

More recently, in November 2022, poliovirus was found in the wastewater of a lab in the Netherlands that conducted research on polio. One lab employee was infected as a result of this mishap, which was described in the Eurosurveillance journal as an “unnoticed breach of containment at the facility.”

None of these incidents resulted in mass outbreaks. But they could have. If they did, what would accountability have looked like?

Certainly, mistakes should be identified and systems put into place to prevent them, as was done in the occurrences above. But if an outbreak spread beyond our shores as a result of human error, should other countries impose sanctions or require reparations? Should they go so far as to demand civil and criminal penalties for lab workers?

And what about diseases that don’t originate in the lab but could be attributed to farming practices, deforestation, climate change and other activities that bring animals — and animal pathogens — closer to humans? Should the Democratic Republic of Congo and South Sudan, where the first two outbreaks of Ebola occurred, be on the hook for costs borne to other countries from Ebola? Should the United States, where Lyme disease was first identified, be held responsible to the world for its effects?

Such blame games are not conducive to the goal of preventing pandemics. They could deter researchers from engaging in scientific investigations crucial to the development of vaccines and treatments. They could also give fodder to conspiracy theories and fuel violence against people of certain ethnic origins, as we have already seen in the rise in anti-Asian attacks. And if countries are worried about liability and retribution, it could further disincentivize global health cooperation.


But it’s not going to make the world safer to threaten punishment.

Riaz Haq said...

See new Tweets
S.L. Kanthan
China is the world’s #1 manufacturer of cars and the #2 exporter of cars.

And China’s #1 customer is… Putin! I mean, Russia.

The U.S. and its non-sovereign puppet continent known as Europe must understand that the world has become more self-sufficient and resilient.

The “Ameripeans” cannot sanction or bomb other countries into submission anymore.


China closes gap with Japan after 2022 car exports surpass Germany with 54.4 per cent surge to 3.11 million vehicles | South China Morning Post

China has surpassed Germany to become the world’s second-largest car exporter after mainland exports jumped 54.4 per cent year on year to 3.11 million vehicles in 2022, according to the China Association of Automobile Manufacturers (CAAM).The nation is also closing in on Japan’s export volume, and is likely to clinch the title of the world’s top car exporter in the coming few years, analysts said.According to MarkLines, an auto industry data provider, Japanese carmakers shipped 3.2 million vehicles abroad in the first 11 months of 2022, almost unchanged from a year earlier.In 2021, Japan exported 3.82 million cars, and it is expected to post a year-on-year decline once its full-year results are tallied.

Germany exported 2.61 million cars last year, up 10 per cent from 2021, according to the German Association of the Automotive Industry (VDA).“The strong growth momentum in China’s car exports has helped the nation to earn a reputation as a powerful carmaker, as its passenger and commercial vehicles are well received by people outside the mainland,” said Cao Hua, a partner at private-equity firm Unity Asset Management. “China’s electric cars have won considerable market share in some developing nations and will eventually propel the country into the top position of the world’s major auto exporters.”

Exports accounted for 11.5 per cent of mainland China’s total 2022 production of passenger cars and commercial vehicles, which rose 3.4 per cent year on year to 27 million, according to the CAAM.

China’s car market, the world’s largest since 2009, has long been dominated by foreign brands such as Volkswagen, General Motors, BMW and Mercedes-Benz.However, the country’s indigenous brands, such as BYD and Geely, are accelerating a global push, supported by a robust automotive supply chain.Electric vehicles (EVs) have become a significant factor in China’s buoyant car exports, with EV shipments surging 120 per cent year on year to 679,000 in 2022, the CAAM data showed.

Citic Securities forecast in a research report last month that China’s car export volume could hit 5.5 million units in 2030, of which 2.5 million cars would be electric.UBS analyst Paul Gong said that Chinese EV builders have been racing ahead of their Japanese and South Korean rivals to tap Southeast Asian markets and also have plans to set up production bases and promote their vehicles there.“It is not just the beginning of the Chinese carmakers’ global push,” said Gong. “They are already the established market leaders in some Southeast Asian countries.”

BYD, backed by Warren Buffett’s Berkshire Hathaway, dethroned Tesla as the world’s largest EV maker in the second quarter of 2022.In mid-October, the company launched its first passenger vehicle in India, the Atto 3 electric sport utility vehicle, to spur overseas sales. It is now selling its cars in multiple overseas markets including Norway, Singapore and Brazil.BYD is also considering building a battery plant in the United States but does not currently plan to sell its electric cars there, according to a Bloomberg news report.

Riaz Haq said...

IMF: "China will be the top contributor to global growth over the next 5 years, with its share set to be double that of the US"

CHINA will be the top contributor to global growth over the next five years, with its share set to be double that of the US, according to the International Monetary Fund.

The nation’s slice of global gross domestic product expansion is expected to represent 22.6 per cent of total world growth through 2028, according to Bloomberg calculations using data the fund released in its World Economic Outlook released last week. India follows at 12.9 per cent, while the US will contribute 11.3 per cent.

The emergency lender sees the world economy expanding about 3 per cent over the next half decade as higher interest rates bite. The outlook over the next five years is the weakest in more than three decades, with the fund urging nations to avoid economic fragmentation caused by geopolitical tension and take steps to bolster productivity.

In total, 75 per cent of global growth is expected to be concentrated in 20 countries and over half in the top four: China, India, the US and Indonesia. While Group of Seven countries will comprise a smaller share, Germany, Japan, the United Kingdom and France are seen among the top 10 contributors.

Brazil, Russia, India and China – known by the acronym BRIC coined by Jim O’Neill, a former Goldman Sachs Group chief economist – are expected to add almost 40 per cent of the world’s growth through 2028.

The four nations established the BRIC forum in 2009 and the bloc became Brics a year later when South Africa – by far the smallest economy in the grouping – was admitted, a move O’Neill disagreed with.

Riaz Haq said...

Kissinger: Beijing “expects…to be the dominant power in Asia…The ideal solution…is a China so visibly strong that that will occur through the logic of events.”

What Mr. Kissinger sees when he looks at the world today is “disorder.” Almost all “major countries,” he says, “are asking themselves about their basic orientation. Most of them have no internal orientation, and are in the process of changing or adapting to the new circumstances”—by which he means a world riven by competition between the U.S. and China. Big countries such as India, and also a lot of “subordinate” ones, “do not have a dominant view of what they want to achieve in the world.” They wonder if they should “modify” the actions of the superpowers (a word Mr. Kissinger says he hates), or strive for “a degree of autonomy.”

Some major nations have wrestled with these choices ever since the “debacle of the Suez intervention” in 1956. While Britain chose close cooperation with the U.S. thereafter, France opted for strategic autonomy, but of a kind “that was closely linked to the U.S. on matters that affected the global equilibrium.”

The French desire to determine its own global policy gave rise to awkwardness with President Emmanuel Macron’s recent visit to Beijing. While critics say he pandered to the Chinese, Mr. Kissinger sees an example of French strategic autonomy at work: “In principle, if you have to conduct Western policy, you would like allies that only ask you about what contribution they can make to your direction. But that is not how nations have been formed, and so I’m sympathetic to the Macron approach.”

It doesn’t bother him that Mr. Macron, on his return from Beijing, called on his fellow Europeans to be more than “just America’s followers.” Mr. Kissinger doesn’t “take it literally.” Besides, “I’m not here as a defender of French policy,” and he appears to attribute Mr. Macron’s words to cultural factors. “The French approach to discussion is to convince their adversary or their opposite number of his stupidity.” The British “try to draw you into their intellectual framework and to persuade you. The French try to convince you of the inadequacy of your thinking.”

And what is the American way? “The American view of itself is righteousness,” says the man famed for his realpolitik. “We believe we are unselfish, that we have no purely national objectives, and also that our national objectives are achieved in foreign policy with such difficulty that when we expose them to modification through discussion, we get resentful of opponents.” And so “we expect that our views will carry the day, not because we think we are intellectually superior, but because we think the views in themselves should be dominant. It’s an expression of strong moral feelings coupled with great power. But it’s usually not put forward as a power position.”

Asked whether this American assertion of inherent unselfishness strikes a chord with other countries, Mr. Kissinger is quick to say: “No, of course not.” Does Xi Jinping buy it? “No, absolutely not. That is the inherent difference between us.” Mr. Xi is stronger globally than any previous Chinese leader, and he has “confronted, in the last two U.S. presidents,” men who “want to exact concessions from China and announce them as concessions.” This is quite the wrong approach, in Mr. Kissinger’s view: “I think the art is to present relations with China as a mutual concern in which agreements are made because both parties think it is best for themselves. That’s the technique of diplomacy that I favor.”

In his reckoning, Joe Biden’s China policy is no better than Donald Trump’s: “It’s been very much the same. The policy is to declare China as an adversary, and then to exact from the adversary concessions that we think will prevent it from carrying out its domineering desires.”

Riaz Haq said...

Richard D. Wolff - Why the Troubled U.S. Empire Could Quickly Fall Apart - Brave New Europe

For the first time in over a century, the United States has a real, serious, ascending global competitor. The British, German, Russian, and Japanese systems never reached that status. The People’s Republic of China now has. No settled U.S. policy vis-à-vis China has proven feasible because of internal U.S. divisions and China’s spectacular growth. Political leaders and “defence” contractors find China-bashing attractive. Denouncing China serves as popular scapegoating for many politicians in both parties and as support for an ever-increasing defense spending by the military. However, major segments of large corporate business have invested hundreds of billions in China and in global supply chains linked to China. They do not want to risk them. In addition, for decades, China has offered one of the world’s lowest-cost, better educated and trained, and most disciplined labour forces coupled with the world’s fastest-growing market for both capital and consumer goods. Competitive U.S. firms believe that global success requires their firms to be well established in that nation with the world’s largest population, among the world’s least-costly workers, and with the world’s fastest-growing market. Everything taught and learned in business schools supports that view. Thus the U.S. Chamber of Commerce opposed former President Donald Trump’s trade/tariff wars and now opposes President Joe Biden’s hyped-up programme of China-bashing.

There is no way for the United States to change China’s basic economic and political policies since those are precisely what brought China to its now globally envied position of being a competitor to a superpower like the U.S. Meanwhile, China is expected to catch up to the United States with equality of economic size before the end of this decade. The problem for the U.S. empire grows, and the United States remains stuck in divisions that preclude any significant change except perhaps armed conflict and an unthinkable nuclear war.

When empires decline, they can slip into self-reinforcing downward spirals. This downward spiral occurs when the rich and powerful respond by using their social positions to offload the costs of decline onto the mass of the population. That only worsens the inequalities and divisions that provoked the decline in the first place.

The recently released Pandora Papers offer a useful glimpse into the elaborate world of vast wealth hidden from tax-collecting governments and from public knowledge. Such hiding is partly driven by the effort to insulate the wealth of the rich from that decline. That partly explains why the 2016 exposure of the Panama Papers did nothing to stop the hiding. If the public knew about the hidden resources—their size, origins, and purposes—the public demand for access to hidden assets would become overwhelming. The hidden resources would be seen as the best possible targets for use in slowing or reversing the decline.

Decline provokes more hiding, and that in turn worsens decline. The downward spiral is engaged. Moreover, attempts to distract an increasingly anxious public—demonizing immigrants, scapegoating China, and engaging in culture wars—show diminishing returns. Empire decline proceeds but remains widely denied or ignored as if it did not matter. The old rituals of conventional politics, economics, and culture proceed. Only their tones have become those of deep social divisions, bitter recriminations, and overt internal hostilities proliferating across the landscape. These mystify as well as upset the many Americans who still need to deny that crises have beset U.S. capitalism and that its empire is in decline.

Riaz Haq said...

Arnaud Bertrand
Incredible, Gina Raimondo implores US industry to respect her sanctions because: "America leads the world in AI… America leads the world in advanced semiconductor design. That’s because of our private sector. No way are we going to let [China] catch up."

This is an incredible admission because the Biden administration's messaging - or shall I say propaganda - on their semiconductors sanctions has so far always been that it isn't to gain or maintain a competitive advantage over China, but solely to prevent China's military from accessing to certain technologies. See for instance what Janet Yellen said on exactly this: "[the sanctions are] tailored toward the specific national security objective of preventing the advancement of highly sensitive technologies that are critical to the next generation of military innovation and [are] not designed for us to gain a competitive economic advantage over any other country." (Src: )

Our Anthony Blinken: "One of the important things for me to do on this trip [to China] was to disabuse our Chinese hosts of the notion that we are seeking to economically contain them... However, what is clearly in our interest is making sure that certain specific technologies that China may be using to, for example: advance its very opaque nuclear weapons program, to build hypersonic missiles, to use technology that may have repressive purposes – it’s not in our interest to provide that technology to China. And I also made that very clear. So, the actions that we’re taking, that we’ve already taken, and as necessary that we’ll continue to take are narrowly focused, carefully tailored to advance and protect our national security. And I think that’s a very important distinction." (src: )

Pretty much everyone knew this was 100% bullshit and all done for the purpose of America maintaining a competitive advantage in the technologies of the future, like AI. But now we have the Secretary of Commerce, who implemented these sanctions, say exactly that.

Riaz Haq said...

America’s assassination attempt on Huawei is backfiring
The company is growing stronger—and less vulnerable

America’s assault continues. In May, for instance, regulators revoked a special permit allowing Intel and Qualcomm, two American tech groups, to sell Huawei chips for laptops. Yet Huawei has not just survived; it is thriving once again. In the first quarter of this year net profits surged by 564% year on year to 19.7bn yuan ($2.7bn). It has re-entered the handset business. Its telecoms-equipment sales are rising again. And it has achieved this in large part by replacing foreign technology in its wares with home-grown parts and programmes, making it much less vulnerable to American hostility in future. Having failed to kill Huawei, Uncle Sam’s attacks have only made it stronger.

Mr Ren, a former soldier, started Huawei in 1987 in his flat in Shenzhen, importing foreign telecoms gear to sell to Chinese customers. An engineer by training, he quickly started making his own equipment. As China’s telecoms market grew, so did Huawei. By 2020 it had become not only the world’s biggest smartphone maker, but also the leading provider of mobile-network gear, with a market share of 30%.

Mr Ren has never been short of ambition for Huawei. Its name is a contraction of the phrase “China has promise”. Its headquarters in Shenzhen are impossibly grand and imposing. A palatial meeting hall features ornamentation worthy of Versailles: marble columns, inlaid floors and oil paintings of bucolic scenes across the ceiling. In a nearby manufacturing city the company has built a European-style town around a lake, complete with life-size replicas of castles that serve as meeting rooms and libraries.

Mend of an empire
In retrospect, America’s blitz only briefly shook this empire. Huawei’s sales last year, of about $100bn, are twice those of Oracle, an American tech firm. It is half the size of Samsung, a South Korean phonemaker, but outspends it on research and development. In fact its r&d budget of $23bn in 2023 was exceeded only by America’s biggest tech firms: Alphabet (the parent of Google), Amazon, Apple and Microsoft (see chart 1). Last year’s profits, of about $12.3bn, put it on a par with Cisco Systems, an American communications group, and vastly exceed those of Ericsson and Nokia, its main rivals in the mobile-networks business. And whereas Ericsson and Nokia are laying off staff, Huawei’s headcount is growing. It now has 12,000 more workers than it did in 2021.

Huawei’s core business remains telecoms-network equipment, which brought in about half of its revenues last year. In recent years this division has also formed teams of engineers to take on consulting projects, helping to re-wire and so streamline all sorts of businesses, from ports to coal mines. These new initiatives have pitted it against Western rivals such as Cisco Systems, Siemens and Honeywell.

Bric-a-brac from the dead
The consumer division, which generates a third of sales, makes all manner of devices that can connect with 5g. It has begun releasing fancy smartphones again, but also makes watches, televisions and the systems that control many Chinese electric vehicles (evs). Revenue from consumer devices grew by about 17% in 2023, thanks mainly to the new smartphones.

A cloud-computing unit accounts for almost a tenth of revenues. Its sales grew by 22% last year. As Microsoft shrinks its operations in China, owing to American tech sanctions, Huawei is said to be scooping up its engineers. Another fast-growing unit focuses on energy, including ev charging networks and photovoltaic inverters, which turn the direct current produced by solar panels into the alternating sort that flows through the grid.